“Matters related to violence and energy have been singled out as issues continuing to cut down benefits from the mining industry last year,” said Mr Ami Mpungwe, Chairman of Tanzania Chamber of Minerals and Energy (TCME) in a telephone interview on Tuesday in Dar es Salaam.
He said red tape also contributed to increased costs of doing business resulting into the reduction of profit margins despite higher commodity prices fetched in the world market. He recommended the need for continued dialogue among various stakeholders in the mining and energy sectors to address the problems in order to realize the designated benefits.
For example, nearly 150 megawatts of electricity will be needed when all mines are connected to the national grid. In terms of violence, he said attacks were mostly experienced at the North Mara Gold Mine, Golden Pride Gold Mine in Nzega and Geita Gold Mine where illegal miners were involved in fuel stealing.
Enforcing safety and security measures in mining areas is a costly affair and thus severely weakening the industry’s competitiveness in the world market. Mpungwe called for intervention by the law enforcement agencies, to secure mining areas and protect unarmed workers.
With regards to the euro zone crisis presently hitting some Western countries, Mpungwe said it will not affect much as demand and better prices for mining commodities are expected to build up particularly from the Asian countries. “We expect an improved global demand and better prices for mining commodities from the fast emerging markets of India and China,” he said.
He warned on comments made by some analysts that mining contributions to the economy was still minimal that could mislead the nation. Instead, he said mining investments is a long term affair with immense capital thus it’s impossible to realise high returns in the short run.
The last decade alone has witnessed an investment worth about 2.5 billion US dollars in exploration and mining operations. But the mining sector contributions into the Gross Domestic Product (GDP) are still below 10 per cent. He added that serious investments in the mining sector started just a decade ago but it is too early to determine its contribution to the economy.