EDITORIAL: Mining sector needs urgent support

As the world marked International Mining Day on Monday, for many Rwandan miners and mineral exporters, there was little to celebrate. The sector has been hard-hit by falling metal prices on the global market driven by the scale down by leading consumer China on mineral purchases. With many mining and mineral trading firms out of business, the industry, one of the top five foreign exchange earners for Rwanda, needs targeted intervention to keep miners in business. Matters are not helped by the capital intensive nature of the mining sector, requiring specialised equipment and expertise. However, with banks reluctant to fund mining ventures, government will need to think of extending more waivers and incentives to revitalise the sector, especially as downward trend of global commodity prices continues. In fact, the local mining sector’s export value dropped a staggering 36.6 per cent in the first six months of this year to $40.73 million (about Rwf34 billion), from $64.24 million (about Rwf78 billion) during the same period in 2015, and $93.45 million in 2014. In addition, Rwanda Mining Association (RMA) reports that 90 of the formerly 260 mining firms have since closed. Besides, the challenging environment could force more firms to stop operations, with the resultant job losses. Therefore, urgent action is required to address the long-running challenges to prop up the sector. Last year, the Finance ministry and other responsible ministries pledged to help sector players easily access bank loans. This is the time for the ministries to deliver on the pledge so firms can acquire much-needed recapitalisation to rejuvenate their operations and spur mineral exports. Without government guarantees, mining firms and metal exporters cannot secure funding from banks given the falling metal prices. Professionalisation of the sector is a good move, but the urgent issue is business survival for sector players. Which is why urgent and targeted intervention is critical to support miners solve challenges affecting performance, like lack of funding, high mineral traceability fees taxes, and loyalty charges, among others. Local smelter, Phoenix, could also be supported to enhance its capacity and hence increase the value of Rwandan minerals.

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EDITORIAL: Mining sector needs urgent support