How TZ unlocks mining sector’s huge potential

ENVISIONED in the National Development Vision 2025, Tanzania’s mining sector has reached notable milestones, contributing 10 per cent to the Gross Domestic Product (GDP) in 2023.

DAR ES SALAAM: ENVISIONED in the National Development Vision 2025, Tanzania’s mining sector has reached notable milestones, contributing 10 per cent to the Gross Domestic Product (GDP) in 2023.

This achievement surpassed the target set by the National Five-Year Development Plan (FYDP III – 2021/22 – 2025/26), which aimed for a 10 percent share of GDP by next year, up from 5.6 per cent in 2020.

These major strides reflect improvements in the investment climate, driven by favourable laws, policies, and effective governance.

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By harnessing the mining sector’s vast potential, Tanzania now ranks higher among African economies for attracting Foreign Direct Investments (FDIs) and stands out among non-oil economies.

Tanzania is rich in a diverse range of industrial minerals and precious metals, including iron ore, soda ash, coal, clay, uranium, gold, diamonds and tanzanite—a rare gemstone found exclusively in the East African nation.

FYDP III seeks to promote natural resources-based industrialisation and key interventions include, strengthening the management and control of large-scale and medium scale mining, empowering small-scale miners including youth and women to participate in feasible mining activities by licensing areas with basic geological information, necessary training on productive mining, technologies and equipment and mining business through the State Mining Corporation (STAMICO).

Other key interventions include; strengthening the Mining Commission, Geological Survey of Tanzania (GST), Tanzania Gemmological Centre (TGC) and Tanzania Extractive Industries Transparency Initiative (TEITI), promoting mineral value addition and beneficiation, identifying, promoting and facilitating extraction of rare minerals; and strengthening Corporation and Mineral Markets, Demonstration Centres and Centres of Excellence.

These government efforts aim to implement mining sector interventions to achieve an average growth rate of 7.7 per cent by 2025/26, up from 6.9 per cent recorded in 2019/20.

The sector’s contribution to GDP is expected to increase from 5.6 per cent in 2019/20 to 10 per cent by 2025/26. Additionally, total foreign exchange earnings are projected to rise from 2,997 million US dollars in 2019/20 to 5,505 million US dollars in 2025/26.

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The vision indicates that the percentage of raw minerals export is to drop from 15 per cent registered in 2019/20 to 5 per cent in 2025/26, beneficiated is targeted to reach 95 per cent in 2025/26 from 85 per cent in 2019/20, while percentage share on foreign exchange earnings is pegged to attain 50.5 per cent growth in 2025/26 form 50.3 per cent in 2019/20.

In a recent interview with local media in Dar es Salaam, Minister for Minerals, Mr Antony Mavunde, said that the mining sector surpassed other sectors in generating foreign currency during the 2022/2023 financial year, contributing 56 per cent.

Mineral exports for the 2022/2023 fiscal year amounted to 3.1 billion US dollars (about 8.4tri/-). Mr Mavunde noted that tax revenue collected from the mining sector in the same period reached 2.1tri/-, which represents 15 per cent of the total domestic revenue. Additionally, financial transactions in 100 procurement centres and 42 mineral markets totaled 1.7tri/-.

The government revenue from the sector during the 2022/2023 fiscal year was 678bn/-, while in 2023/24 fiscal year, it accrued 753bn/-. Looking ahead, Mr Mavunde set a target of 1tri/ in revenue for the ongoing 2024/2025 fiscal year, expressing confidence that this ambitious goal is achievable due to the government’s commitment to transforming the mining sector.

He attributed the sector’s successes to the government’s efforts in conducting High-Resolution Airborne Geographical Surveys, which account for 16 per cent of the progress.

Mr Mavunde expressed optimism about continued positive results from the sector due to intensified surveys.

The government has introduced Vision 2030, themed “Madini ni Maisha na Utajiri” (Minerals are Life and Wealth), which aims to integrate mining with other economic sectors such as agriculture, water, and health through geographical surveys.

The Vision 2030 will facilitate detailed mineral exploration, promote innovation, and improve planning. Additionally, it will address soil acidity issues by using lime during cultivation and treat salinity in over 3.7 million hectares of land with gypsum.

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The minister also highlighted ongoing helium explorations in Rukwa and Songwe regions, which could position Tanzania as the third-largest helium producer globally, after Russia and the United States. Helium is essential for MRI (magnetic resonance imaging) scan machines and other applications.

The completion of the High-Resolution Airborne Geographical Survey is expected to attract further mining investments and fully exploit Tanzania’s mineral deposits, including helium.

The Vision 2030 aims to lead to new mineral discoveries, enhancing GDP growth and ensuring the sector’s sustainability.

To accelerate the sector’s transformation, the government has increased the Mining Ministry’s budget from 89bn/- in the 2023/2024 fiscal year to 231bn/- in the 2024/2025 fiscal year.

Of this budget, 115bn/- has been allocated to the Geological Survey of Tanzania (GST) for constructing two zonal mineral laboratories in Geita and Chunya. These facilities will provide accurate mineral analysis for miners.

Additionally, the government plans to build a state-ofthe-art laboratory in Dodoma, the country’s administrative capital. GST is collaborating with the Geological Survey of Finland to upskill local talent for operating these laboratories.

To further support mining, the government is procuring a helicopter for in-depth geological surveys, which will enable small-scale miners to engage in more predictable mining based on gathered data.

Mr Mavunde emphasised that accurate geological information is crucial for mining success. He also noted the global shift towards electric vehicles, which require graphite for batteries.

Currently, global demand for graphite stands at 6.5 million tonnes, while supply is only 1.2 million tonnes, with China contributing about 64 per cent. In Africa, Madagascar dominates graphite production with 13 per cent, Mozambique follows with 10 per cent, and Tanzania is in third place with 0.64 per cent.

Nine licensed investors are expected to significantly increase graphite production in Tanzania. Regarding Mirerani, he mentioned that the government has allocated 5bn/- for the construction of the Tanzanite Exchange Centre, which is 84 per cent complete and expected to be finished soon.

This facility will centralise Tanzanite-related business activities in the country.