Saturday, April 11, 2009

Rwanda sees mining receipts falling 40% in 2009

Rwanda's mining revenues may fall 40 percent to around $56 million this year, down from a record $94 million in 2008, as demand contracts and prices drop on the world market, a government minister said on Thursday.

The global slowdown has throttled demand for Rwanda's high-end minerals such as tin and tungsten but sales of tantalum, a rare metal used in electronics, are stable, said Vincent Karega, Minister of Minerals and Natural resources.

In response to the slump in global commodity prices, mining companies are cutting production and watching the market carefully for signs of a price rebound, he said.

"On average we are talking about a drop of about 40 percent ... but the good news in Rwanda is that nobody has stopped investing," Karega told Reuters in an interview.

Volatility is common in commodities markets and had not deterred serious long-term investors, he said.

Rwanda's political stability and comparatively better infrastructure has made it a major transit and processing point for minerals from its war-torn neighbour Democratic Republic of Congo.

Karega said he was hopeful Rwanda's mineral sector would boom as soon as the world economy recovered.

"The minerals produced in Rwanda are part of the rare minerals. It's not like steel or copper which takes a lot of time to recover," he said.

In 2008 Rwanda re-exported ore worth $43 million, according to a central bank report.

'BLOOD MINERALS' 

The mineral trade in eastern Congo has long been seen as a fuel of the decade-long conflict and humanitarian catastrophe in which an estimated 5,4 million people have died.

A constellation of militias, including Rwandan Hutu rebels responsible for the 1994 genocide and rogue Congolese army brigades, use revenues from the illegal taxation of minerals to fund their activities.

Echoing a report published this week by London-based Resource Consulting Services, Karega said a tracing system for "blood minerals", which could potentially help prevent electronics companies from inadvertently funding the violence, would be impractical in lawless eastern DR Congo.

According to the report, disrupting the trade would most likely hurt the 1 million people in the region whose livelihoods depend on it.

"Minerals are not the cause of conflict. Minerals are the source of wealth, the source of income, jobs and a commodity for trade across borders," Karega said.

"We need to deal with the two in a separate manner - address the conflict and then manage trade."

Shutting down the mineral trade completely, according to the report, would push the armed groups into other sectors, possibly increasing instances of extortion and abuse of civilians, and drive them into new geographical areas.