Falling global prices of mineral commodities are the latest challenges to the profitability of the mining sector, threatening to eclipse the gains achieved over the years.
Local miners have expressed worries over the trend saying it would hurt their operations and the sector.
Jean Malic Kalima, the president of Rwanda Mining Association, said during the association's general assembly that they were worried of the falling prices and its impact.
"The continued fall of the prices of minerals continues to worry us and it threatens profits and the country’s mining sector's performance and other operations,” he noted.
Faida Jean Marie-Vianney, a mineral trader who owns Blue Change Mining Ltd, a company which processes and trades in minerals, told The New Times the price falls were beginning to affect revenues.
"A kilo of coltan, for instance, was $60 when the prices rebounded last year. Today, price has dropped to somewhere between $40 and $45 per kilo. We are already feeling the impact,” he said.
"If this continues, we shall have to cut costs and lay off a number of workers for us to be able to stay in business”.
In the last six months alone, minerals that Rwanda takes to export markets like coltan, cassiterite and wolframite have experienced sharp falls in the prices on the international market.
According to the international market prices, prices of coltan (tantalum) dropped by over 15 per cent between January and June, wolfram (tungsten) was down 18 per cent and cassiterite (tin) dropped slightly lower by 3 per cent.
Francis Gatare, the Chief Executive of Rwanda Mines, Petroleum and Gas Board (RMB), said during the assembly that there was little optimism that the trend would change soon.
"There is short term uncertainty associated with the global trade wars among the big markets. We are not sure whether this trend will change anytime soon,” he said.
He added that this was already affecting expectations on export revenues for the country. It has forced the Government to maintain its minerals export outlook for the current financial year at $300 million.
In the last financial year, the country missed its mineral export targets – export revenues stood at $306 million against the target of $600 million.
Gatare said that the plan was to work with local processing companies, particularly the smelting companies, to begin adding value and sell to domestic markets.
In many ways, he added, it will save local companies costs associated with transportation and help them get refinancing of the operations very quickly.
"What I think will help is to diversify operations because there has been concentration on the so-called 3Ts (tin, tantalum and tungsten),” he noted.
Rwanda is no longer enjoying the monopoly on the tin, tungsten, and tantalum on the global market as it has been for the past decade.
The country has been a major exporter of these minerals for the last ten years but Gatare said that was changing.
Rwanda is now home to an operating gold refinery and other various gold deposits. Companies are being encouraged to diversify and put their professional operations into mining and raise the supply to the local refinery.
The Government is also encouraging companies to diversify into precious gemstone – a mineral that Rwanda has recently embarked on promoting.
Currently, mining is the second largest contributor to the economy behind tourism, employing more than 37,000 people.
editor@newtimesrwanda.com