Rwanda has rejected more than 200 mining licence applications as it seeks to streamline a sector that is dogged by illegal activity and disputes with investors that have culminated in costly lawsuits.
Most of those who were denied licences are local co-operatives that have been at the heart of some fatal mining accidents, as well as some foreign investors whose capital was deemed lower than what is required, officials at the Mining Board told The EastAfrican.
Mining accidents had killed at least 50 people and injured 40 by May this year.
The Cabinet approved applications from only six companies. The companies were offered 13 mining and quarrying contracts valued at over $25 million.
Local companies Africeramic and Mountain Ceramics were granted licences to exploit clay deposits in the country. The others are Polish company Luna Smelter, which was granted eight exploration licences for cassiterite and coltan in Gatsibo District for four years. The company is expected to invest at least $14.4 million in the business. Luna Smelter runs the only tin smelter in the country, in partnership with Ngali Holdings, a locally-registered parastatal.
A Chinese investment, Paragon Mining Industry, was awarded a medium scale mining license for cassiterite and coltan for five years, with a total initial investment plan of $5.2 million.
The stringent licensing procedure comes after a new mining law last year effectively blocked investment proposals valued below $8 million.
The mining sector has over the past decade fetched Rwanda the second-highest revenues after tourism.
But currently, its principle minerals — cassiterite, wolfram and coltan — have been hit by low prices on the international market, adversely affecting the lives of hundreds of thousands of artisanal miners and the revenue that the country generates from the sector.
“Coltan is the most affected by low prices. There are no buyers for the mineral on the international market,” said Frank Butera, the executive secretary of Rwanda Mining Association. “Prices for cassiterite have also been dropping since April. Wolfram had sustained a strong price but it also started sliding beginning of June. There are efforts to add value to the minerals in order to sidestep bad prices.”
Rwanda’s earnings from minerals doubled to $373 in 2017 from $166 million in 2016, according to the Mining Board. But last year, earnings dropped by more than $20 million to $347.6 million mainly as a result of poor performance in the last quarter.
Rwanda has endeavoured to reduce the effect of price fluctuation on its minerals by investing in a smelter for value addition. The tin smelter in Karuruma in Kigali began operations early this year but it is running below capacity, officials said.
The country has also suffered under weak agreements with foreign mining investors, forcing it to cancel several contracts that failed to meet standards. This has led to lawsuits with some miners accusing Rwanda of “nationalising” its assets and breaking the obligations in their contract.
For example, American investment group Natural Resources Development took Rwanda to the International Centre for Settlement of Investment Disputes, seeking compensation of $95 million after the government seized its mining concessions.
In its response last week, Rwanda asked that the case be dropped. Kigali said that the investors had mismanaged the concession and failed to invest enough funds.
The case proceedings are expected to start in August.