Tanzania officially became Africa’s third largest gold-producing country (after South Africa and Ghana) in July with the inauguration of its largest underground gold mine -the Bulyanhulu mine in Shinyanga run by the Kahama Mining Corporation Limited and Barrick Gold Corporation with a gold resource base of 14.6 million ounces. The Guardian described how an elated President Mkapa at the inaugural ceremony had indicated that in the rich and powerful stock exchanges of Toronto, New York, London, Paris and others they were learning to pronounce the Sukuma name, BULYANHULU, a village in a country they had never set foot in. As gold output from the mine built to full production, government royalty payments and taxes were expected to raise almost Tsh 12 billion ($13 million) for the economy in the first year alone, its contributions increasing as production at the mine rose. Addressing a huge audience at the mine site, which included delegates from around the world, the President attributed Tanzania’s quick leap to success to the country’s on-going economic reform measures. “The geological resources, however plentiful and attractive they may be, will remain unexploited, as indeed is the case in a number of countries, if the right enabling environment is not in place” he said. Tanzania had in the last five years received over one billion US dollars investment in exploration and mine development with the Bulyanhulu mine alone being worth US $ 280 million. Gold output was forecast to grow from 263,000 ounces in 2001 to 400,000 ounces a year by 2003. Mention was made of other benefits arising from the Bulyanhulu investment: Construction of a 68-kilometre road from the mine to the Kahama-Isaka road; construction of a 47kilometre water pipeline from Lake Victoria to the mine, which is providing water outlets to communities along the way; an electricity transmission line from Kahama to the mine, which also providing power to the surrounding communities; and, the upgrading of Kahama Hospital.
The Bulyanhulu mine will operate alongside Australian Resolute’s Golden Pride mine whose annual production is around 202,000 ounces, and the Geita gold mine -a joint venture between Ghana’s Ashanti Goldfields and South Africa’s Anglogold.
Randall Oliphant, Barrick Gold’s President and CEO, said his company had chosen to invest in Tanzania owing to the country’s good governance, progressive economy, stable investment and legal climate. President Mkapa said “I know there is constant criticism that perhaps Tanzania has given away too much in creating a conducing environment for inward foreign investment especially in mining. But we remain fully committed to creating, maintaining and sustaining such an environment.
Tanzania’s mining development stalled after the country adopted socialism soon after independence in 1961. Production declined to an all time low of 84 ounces in 1975 against a peak of 100,000 ounces in 1938 under British rule, due to poor planning and management. But a new mining act in 1998 opened the sector to foreign investment and that policy is now bearing fruit, with Tanzania attracting investors even when gold prices have fallen to around 18-month lows.
The mining of the gemstone Tanzanite is creating problems. The East African (18th June) reported that following the granting of mining rights to the South African mining company AFGEM two foreign businessmen had been deported on grounds of alleged involvement in the smuggling of Tanzanite. There had also been several violent clashes at the gemstone pits at Mererani, near Arusha, during this year claiming the life of one man. Small scale miners have also gone to court to challenge the AFGEM monopoly and alleged harassment of indigenous miners. An Indian owned company that polishes Tanzanite gemstones, was said to be experiencing problems in obtaining sufficient stones since AFGEM, had been given its license.
AFGEM is branding its stones making it difficult for Tanzanite smugglers to sell their unbranded gemstones. Another civil court case is underway. A former Tanzanian Director of AFGEM is suing the company for fraud. As this issue of TA went to press the High Court had demanded the immediate presence in court of one of AFGEM’s officials from South Africa.