Let’s partner with foreigners in mining sector

INTERVIEW. Dr Dalaly Peter Kafumu, a geologist, served as Commissioner for Minerals for five years from 2006 before joining politics.BusinessWeek Editor, Samuel Kamndaya, met him in Dodoma recently. Their discussions went as follows:

Can you briefly tell us about yourself?

As is well known, I am a geologist. I hold a PhD in quaternary geology – obtained from the Free University of Brussels in Belgium in 2000. Before reaching that level, I joined the University of Dar es Salaam where I obtained a Bachelor of Science degree (Geology) in 1983.

I also hold a Postgraduate Diploma in Education from the University of Dar es Salaam and a Postgraduate Diploma in Mineral Exploration from the International Institute for Aerospace Sciences in the Netherlands in 1991.

I first joined the Free University of Brussels in Belgium in 1995 where I received a Master of Science degree in quaternary geology before undertaking doctoral studies at the same university.

I have worked in government for about 30 years (from 1980 to 2011) – with my first position being an officer in the Geology Survey of Tanzania.

As soon as I obtained a Postgraduate Diploma in Education, I received an appointment to go and open the Mineral Resources Institute here in Dodoma and having obtained a Master’s degree, I was once again transferred back to the Geological Survey where I worked in the Geohazard Department.

In 2002, I was shifted to the ministry where I became the head of Promotion and Statistics. My major task was promoting investments into the Minerals Sector.

I have extensively travelled to countries like South Africa, Canada and the United Kingdom among others. In 2004, I became the ministry’s communication officer. The idea was that being an expert, I was better placed to speak anything about the ministry. It was in 2005 when President Jakaya Kikwete appointed me the Commissioner for Minerals.

During the years that you worked as Commissioner for Minerals, what would you say were your achievements?

When I became commissioner, the department had just two assistant commissioners. Knowing the potential of the sector, I decided to increase the number of assistant commissioners by creating eight more posts.

Each of the eight was to man one zone: Eastern, Southern, Northern, Central, Western, Western Central, Lake as well as Southern Highlands zones. We also embarked on a review of the mineral sector, an idea that resulted in the formation of the Mark Bomani Commission.

The secretariat for the commission was from my office. Experts proposed a review of the mining policy and that was how we came up with a new one in 2009 to replace the one that was initiated in 1997.

We also managed to review the law governing the sector and that was how we came up with a new one in 2010 – complete with its regulations. By the time I left the ministry, it had a total of 11 assistant commissioners.

Among the many issues that we managed to come up with was a change in royalties from a uniform of three per cent to one that ranges between three and five per cent, depending on the type of the mineral. We also created a fund meant to help small-scale miners and that gemstones should only be mined by Tanzanians.

It was in the new legal framework that we decided that the government should hold free carried interests in all mining firms as well as the creation of a special fund to help artisanal miners. I see these issues as my legacy at the ministry and I am proud to have done that.

It should also be noted that it was during that time that we signed the pipeline project that is currently being constructed between Mtwara and Dar es Salaam. I remember Mr Willian Ngeleja and I left for China for the project when the Sengerema Member of Parliament was still the minister for Energy and Minerals. It is now being implemented. It was our idea and we did almost everything.

What were your worst and best moments as a commissioner for minerals?

At one point, I even wanted to resign because one of my colleagues was not in very good terms with me. That was my worst moment. My best moment was when the Parliament endorsed the New Mining Act.

Some of the so-called human rights activists had strong opposition to the law while at the same time, the ruling party wanted it to be endorsed before the 2010 elections. It should also be remembered that I had worked tirelessly to come up with the document.

When it was finally endorsed, I was very happy to the extent that I went to the United Kingdom for a two-week holiday.

Is there anything that you hate about the way the mining sector is being developed in Tanzania?

Basically, the sector is progressing well. It is encouraging that we are now regarded as role models within the region, with countries like Kenya, Uganda, Ethiopia and DRC coming to learn from us. Our policies are good. They favour the interests of Tanzanians and investors alike.

The only problem is that a majority of Tanzanians, including the media, still hold to the socialism way of thinking. They still think the government should own everything.

The issue is that we need to localise technology and capital from developed nations. We need to learn from China, India and Dubai, among others, on how they managed to transfer technology and capital from the West to their nations.

Why do Tanzanians perceive the sector the way they do?

There is a misconception that minerals mean money. People need to understand that unless mined using complicated and expensive technologies, minerals appear just like any other tough and useless stones.

The process of removing minerals from stones is very expensive and that is why a small-scale miner will never become rich. The venture is expensive even to large-scale miners because it needs years of feasibility studies and a plan that can convince the bank that indeed the project can be profitable.

No individual in Tanzania or the government can do that. However, both – Tanzanian individuals and the government – can be partners with foreign investors in developing this sector. To benefit from the sector, we need to increase local content through government and local investors as well as through supply of services and equipment to miners.

Are you happy in politics?

The good thing with politics is that you get a chance to stay with your people at home. You share the problems with your people. In short, with politics, you live the life of your people. My only concern is that Tanzania’s politics is now heavily skewed in favour of those who have money.

Everyone, including your own electorate, regard you as someone who has come to fill their pockets with money. In that aspect, I find it increasingly difficult to fit into the shoes of my predecessor [the former Igunga MP, Mr Rostam Aziz].

This makes me uncomfortable with politics. Similarly, I am equally uncomfortable with the use of abusive language in politics.

This is why I have written a document in which I argue that democracy should not exist in very poor countries until such a time when they (the countries) are capable of meeting their basic needs. Africa needs to redefine its own democracy because left unchecked, we have people who do a lot of unethical things in the disguise of democracy.

Gold prices were very low until earlier this year when they started showing signs of recovery. Do you see them as coming back to $1800/ounce levels?

The good thing with gold is that it has not been replaced by any other mineral as a monetary representative. That is what gives it a boost. It is my view that though prices may go down, at one time, they (the prices) will go up once again. Gold cannot completely vanish. It is unlike minerals like mica – which were very famous until in the 1980s.

We had such mines in Ulanga and Mikese, among other locations. The USA has the highest gold reserves. It is followed by the World Bank, the International Monetary Fund and Germany.

We had also requested to start keeping enough of gold stocks so they can be used as foreign reserves. Former Finance minister, the late Dr William Mgimwa, had once promised to start the initiative. With his untimely death, we are not sure if the plan will continue.