BoT's gold buying spree strengthens reserves

In an exclusive Q&A, The Citizen's Jacob Mosenda sat down with minister for Minerals, Mr Anthony Mavunde, to discuss steps being taken to unlock the sector’s full potential and the benefits this will bring to Tanzania. Read on

Question: We’ve seen significant efforts to reshape the mining sector to benefit Tanzanians, with an emphasis on vision 2030 with the theme “Minerals are Life and Wealth.” Can you tell us about the current developments?

Answer: Our mining sector is undergoing a profound transformation. There have indeed been concerns that the sector hasn’t fully realised its potential despite our resource wealth.

We’re addressing this by focusing on mapping and exploring our mineral deposits comprehensively. So far, only 16 percent of the country’s area has been mapped in depth.

This small portion alone has yielded substantial benefits: in the fiscal year 2022/23, mining exports generated $3.1 billion, accounting for 56 percent of Tanzania’s foreign earnings.

Mining’s contribution to the domestic tax revenue was 15 percent, equivalent to Sh2.1 trillion, and the GDP contribution increased from 7.2 percent in 2022 to 9.9 percent this year. Our goal is to reach 10 percent next year.

We have completed geological mapping for 97 percent of Tanzania, yet detailed exploration has been limited to only 16 percent. This is why we launched Vision 2030, with the goal of covering 50 percent of the country.

Such research forms the basis for any mining industry that aims to grow and generate lasting value.

Expanding exploration to 50 percent of the country is ambitious. What resources and funding are required to make this possible?

One of the most significant expenditures in the mining sector is research, which is very costly.

But I would like to take this opportunity to thank President Samia Suluhu Hassan for her strong commitment to advancing the mining sector.

When we joined the ministry, we demonstrated that the Geological Survey of Tanzania (GST) is the heart of the ministry of Minerals because, without research, we cannot make progress.

After presenting our case, the President increased the GST budget.

The ministry of Minerals previously received a budget of Sh89 billion per year, but this financial year, we received Sh231 billion, with over Sh115 billion allocated to GST for research.

We also have development partners with whom we are working well, and we are prepared to collaborate on these research efforts.

They will cover an area of 165,834 square kilometres, equivalent to 18 percent of Tanzania’s area. This is a project we will start this financial year, using aerial surveys to capture images.

There’s been a push for mining companies to list on the Dar es Salaam Stock Exchange (DSE) so that Tanzanians can have a stake in the sector. What progress has been made?

Listing on the DSE would allow Tanzanians to directly participate in the wealth generated by the mining industry. Many big companies elsewhere are already listed, in line with law.

We are in the final stages of discussions with the DSE regarding Stami Gold, a state-owned mine operated by Stamico, with plans to list it soon. This move will create more investment opportunities for Tanzanians, helping them share in the value of our mineral resources.

Tanzania has recently launched two major graphite projects, including the Bunyu Graphite Project. Can you provide updates on this sector?

Graphite is in high demand due to its use in electric vehicle batteries. Global demand is around 6.5 million tonnes annually, yet production is only 1.2 million tonnes. While Tanzania currently contributes only 0.64 percent of the world’s graphite, we have over 10 graphite mining licenses in place, including the Lindi Jumbo project, which has already started production.

Projects like the Kudu Graphite Project are also set to start soon. Once all these operations are fully online, Tanzania will be one of Africa’s leading graphite producers.

Mineral smuggling has been a persistent issue in Tanzania. What strategies has the government employed to tackle this problem?

Mineral smuggling has deprived Tanzania of significant revenue.

Since 2017, we’ve enacted laws to establish mineral markets and trading centres, allowing all transactions to go through legal channels. Yet, smuggling persists, largely due to concerns over taxes and fees.

Instead of resorting to strict measures, I chose a more open approach, engaging directly with miners to understand their challenges. We reduced total fees from 30.3 percent in 2019 to 9.3 percent today.

To enforce compliance, we’ve created a task force to monitor and regulate activities. Those found guilty of smuggling face license revocation and blacklisting, effectively barring them from future business in Tanzania.

There was a recent 20 percent sale requirement for mineral traders to sell locally to the Bank of Tanzania (BoT). How has this been implemented, and what has been achieved so far?

The law now requires that a portion of mineral exports be sold locally to BoT to support our national reserves. Initially, there was some resistance, but with the right education, compliance has increased, and we have avoided any disruptions.

BoT last year purchased 418 kilogrammes of gold, and as we speak, BoT has already purchased around 724 kilogrammes, approaching the one-tonne target. This also helps to stabilise the Tanzanian shilling.

One thing I want to share, as directed by the President, is that in Africa, Algeria leads in gold reserves, with 173 tonnes, despite not being a major gold producer. Mozambique ranks last in Africa with six tonnes of gold reserves.

The President asked us, "You mine gold, so why don’t we have a gold reserve? I want to see a gold reserve for my country, Tanzania." Within a month, BoT had already reached one ton in purchases.

Tanzania is rich in critical minerals vital for clean energy solutions. How are you planning to capitalise on these resources?

The global shift toward clean energy, particularly the transition to electric vehicles, has increased the demand for critical minerals. By 2050, demand is expected to be 150 times higher than today. Tanzania has abundant deposits of key minerals like manganese, cobalt, nickel, lithium, and graphite.

To capitalise on this, we have devised a strategy for extracting and adding value to these minerals.

We won’t issue any major licences unless there is a clear plan for value addition within Tanzania. This approach will create jobs and enhance our technological capacity.

One of our flagship projects is the Kabanga Nickel Project, where we are building a $500 million processing plant in the Buzwagi Special Economic Zone.

Within a few years, Tanzania will be a leading player in Africa’s critical minerals industry, contributing significantly to our economy.