Rwanda rising: new regulations and technology powering mining industry.
The position of the Minister of State in Charge of Mining was created in February 2013 to prioritize the sector as a key contributor to the development of the national economy. What milestones have you achieved during this time?
Since my appointment in February 2013, we have drafted a new mining law, which was approved by Parliament on 25 February 2014. The new law is aimed at attracting serious investors, increasing efficiency, and improving value to boost revenues from Rwanda’s minerals. In order to implement this legislation, the Ministry is putting new, easy to use regulations in place that allow users to access to information technology.
Honorable Evode Imena (EI): For instance, we have created an online mining cadaster. This online tool is accessible for people sitting in Sydney, Buenos Aires, Toronto or anywhere to retrieve the mining portal of Rwanda and see the opportunities and areas available for investment, the requirements for each area, and updated preliminary geological information. The Ministry seeks to use information technology to modernize how it manage mining titles and use information technology in everything we do. For most people, Rwanda is about gorillas or genocide, and very few people know about its mining opportunities. The modern mining cadaster will be one of the tools that will help us communicate to the international community.
Rwanda is largely underlain by the Kibaran Orogeny rock system. One of the first steps to increase investment and productivity is to provide information on the geological composition of the country. What has been done to achieve this goal?
EI: In 2013, the Rwandan government invested €2 million to delineate and quantify the mineral resources in four Prospective Target Areas (PTAs). From the results, we identified 11 new areas within the four PTAs. This year the government is again investing almost €1.5 million to explore further these newly identified areas as well as an additional three PTAs. Ultimately, we will focus on seven PTAs, and we are finalizing contracts with two different consultancy firms that specialize in geological exploration to assess the quantity and type of mineralization within those areas. We will conduct the classic geochemical and geophysical mineral exploration in the three remaining PTAs.
Within 12 months we will release preliminary results and by the end of 2015 we will be in the position to present detailed reports to serious investors willing to come to Rwanda. We believe that this data will inevitably highlight the mineral potential beyond tin, tantalum and tungsten and include rare earth elements, copper, zinc, cobalt, silver, gold, precious stones, beryllium and lithium. To make these minerals attractive for larger investors, we are looking at merging different projects together. For instance, there are companies looking at gold in southwest Rwanda that are willing to bring in a pilot plant to start processing the materials.
Rwanda has been praised for its optimal legislation and regulatory framework. However, as we await the imminent release of the new mining code, what are the salient points that you would like communicated to reassure the international investment community that Rwanda’s government remains committed to creating an attractive climate for foreign investment?
EI: The new law proposes to demarcate the country into mining blocks of 400 hectares, 100 hectares and 50 hectares. The blocks of 400 hectares will be reserved for larger exploration companies. A company may choose the number of blocks, but it will be responsible for adhering to investment criteria and reporting for each block. The law aims to push the companies to use the surface areas optimally within the licensed perimeters. We do not want any piece of land to remain unexploited.
The smaller areas, such as 50 hectares, will be dedicated to small artisanal miners, who are important due to the geology of the country. In Rwanda, there are small veins of tin, tantalum and tungsten, which are not attractive for larger companies. However, for an artisanal miner, profits of $5,000 to $10,000 per month make this type of deposit very attractive. The Economic Development and Poverty Reduction Strategy (EDPRS II) plans to create more than 200,000 off farm jobs per year, therefore those types of resources are a key contributor to this strategy.
The other prominent discussion point in the new law has been the implementation of a royalty. The mining industry has supported the introduction of a royalty in Rwanda, but the question was how large it should be. The industry was looking at two percent and the government was looking at five to six percent. After assessing royalty payments in the region, we found the lowest to be two percent with the highest 11%, and the International Monetary Fund informed us that the global average is 3.8%. We eventually decided on four percent and are almost on par with the global average. We want to strengthen Rwanda’s economy and minerals are one of the pillars to achieve this. We also recognize that the mining industry is in its infancy, thus the need to support it and provide specific incentives for export-oriented companies, which are the majority of our mines. The Government of Rwanda has put in place a new investment code so all of the companies that fall in this category are given a period of time to continue to invest before paying tax.
Rwanda boasts what is arguably one of Africa’s best models for engagement with artisanal and small-scale miners. There are now proposed amendments to the regulations surrounding the artisanal sector. Could you explain these amendments and the motivation behind them?
EI: The artisanal sector occupies more than 50% of the current mining industry. What is not artisanal is semi-industrial. Our vision is to move from artisanal to organized small-scale mining. The first regulation is related to occupational health and safety to reduce fatal activities. Surprisingly, our fatality statistics in artisanal mining are small compared to other countries, but it is still a problem. Small steps such as ventilation, toilets near the mine site, a place where ladies and gentlemen can change their clothes, protective equipment, first aid kits on site must be taken. Secondly, we are also asking miners to insure that all their workers with health assistance.
Rwanda has a long-term vision for the mining industry. We do not see the sector as a business for only five to 10 years. Without proper statistics this will not be possible, so we are focused on helping our smaller miners accurately report their resources in terms of reserves and investments. To do this, we are investing $2 million to train the local population and in many cases bringing in expatriates to help with mine management and skills transfer. Part of this investment is to develop Rwandan standards for estimating and reporting. If miners have 5,000 metric tons of tin resources, we want to know if this is based on a standardized reporting system that is similar to the standards used in South Africa and Australia.
The official Mining in Africa Country Investment Guide (MACIG) will be read by all the delegates of African Mining Indaba 2015. What is your message to the African-focused international mining community about the opportunities in Rwanda?
EI: Rwanda is open for investors. Although in its infancy, Rwanda has good prospects, and the Ministry is committed to providing interested parties with the most up to date data. We aspire for the next Indaba to have passports describing each area with an estimate of the money and work needed to operate there. The Ministry is open to meeting with potential investors at Indaba and by February 2015, we will have four to five projects ready for investors.
We understand investors’ concerns and are ready to improve our systems to make it suitable for mining companies, mineral processing companies, for traders and consultants in the mineral industry. The government does not have a mine, so its role is to support the industry. When it grows, we grow.
This interview was part of the research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2015. To participate in this report, please contact Sharon Saylor at email@example.com.