TANGA, Tanzania (Reuters)
A new network of government-controlled gold trading
centers was meant to ensure Tanzania’s small-scale miners got a bigger share of
the country’s mineral wealth. But most still can’t get a foot in the door.
Literally.
Entry to the 28 exchanges scattered
around the East African nation is restricted to those who can afford the
licenses needed to sell the precious metals, which at around $44, is beyond the
means of most small-scale miners who often run up debts just to extract gold
and other precious metals from rented land.
That means they are effectively
excluded from trading on these formal marketplaces – the centerpiece of
President John Magufuli’s drive to curb the black market in mineral wealth.
Magufuli has built
his base by promising to empower poor Tanzanians, and his attempts to formalize
the sale of gold and other minerals are seen as progressive compared to other
countries, such as neighboring Democratic Republic of Congo, where there have
been violent crackdowns here) on informal miners.
The new mineral trading centers make
pricing more transparent, but there is no law that guarantees the miners a fair
share.
Instead, the new system has
strengthened the position of pit owners and, in particular, the middlemen who
help finance them, according to small-scale miners, analysts and
non-governmental organizations.
It has also poured money from
royalties and clearance fees into government coffers since its inception in
March.
Known locally as dealers or brokers,
middlemen have traditionally controlled Tanzania’s vast informal mining sector,
through the loans they make to miners and pit owners and their ownership of
many of the facilities used to process the gold.
Dealers own the majority of the
trading licenses needed to buy minerals in the exchanges, and pit owners own
the majority of the mining licenses needed to sell in them, according to
Tanzania’s Mining Commission, which is the government department that issues
the licenses and oversees the industry.
“The concern is we have a new class
of mining entrepreneurs,” said Edward Hobey-Hamsher, analyst at Verisk Maplecroft,
a consultancy.
“It’s the workers at the bottom who
are the most vulnerable and will continue to be.”
Since 2000, 29,000 mining licenses
have been distributed, including 3,000 between July 1 2018 and June 31 2019,
according to Professor Shukrani Manya, head of the Mining Commission.
That compares to an estimated 6
million people who work as informal miners, according to The Tanzania Mines,
Energy, Construction and Allied Workers’ Union (TAMICO), mostly mining gold
after its price rose 16% this year.
In a statement, TAMICO said it did
not see dealers as obstacles to fair prices for miners but said they would have
higher earnings if they bargained collectively, in a union.
Thomas Munis, chairman of the
Tanzania Mineral Dealers’ Association (TAMIDA), denied that dealers, who number
around 50,000 in Tanzania, exploited miners.
“These arrangements with the
artisanal miners are legally binding and everyone is protected by the contracts
signed,” he said on the sidelines of a meeting of small-scale miners in Tanga,
a port city north of the capital, Dar es Salaam.
“There is no chance for anyone to be
exploited.”
The Minister for Minerals Doto Biteko
did not respond to Reuters’ requests for comment.
Artisanal mining plays a key role in
the wider mining sector because it can rapidly increase supply when prices
rise. But it is dangerous with frequent accidents and the risk of contamination
from the use of mercury, a highly poisonous substance, to recover gold
particles from soil.
It can also be a hard way to make a
living.
Even before they put a shovel in the
ground, miners have to pay rent on the land they dig, which works out at around
45,000 Tanzanian shillings ($19.58) per year per acre, according to TAMICO, a
large amount in a country where the average annual income is around $881,
according to a 2017 analysis by the World Bank.
Instead of a regular wage, miners
have production-sharing arrangements with pit owners. The pit owners, in turn,
often give the dealers the right to process the metal and sell it on, because
they are in debt to them.
The dealers usually divvy up the
proceeds. Sometimes, if the miners strike lucky and the price is high, that can
mean a windfall but much depends on how the takings are split.
Dealers typically take around 30% of
the proceeds themselves, with another 30% going to the pit owner and the
remainder split between ten or more mineworkers.
“Most artisanal miners depend on
brokers for almost everything including food,” said Paulo Maliganya, a
small-scale miner who works in Kakora, in Tanzania’s northern Geita region,
close to the country’s biggest gold mine owned by South Africa’s AngloGold
Ashanti.
“They [have] created dependence in
many artisanal miners and they pay an amount which is a bit lower than the
market prices.”
The government itself is turning out
a big winner from the new system. Gold worth 465.7 billion Tanzania shillings
($202 million) has been traded through the exchanges since they were set up in
March, earning the state 35.4 billion ($15.4 million) in royalties, inspection
fees and service levies, according to Manya, the head of the Mining Commission.
The amount traded is a fraction of
the $1.5 billion worth of gold exported last year from Tanzania, which works
out at about 33 tonnes according to Reuters’ calculations.
Small-scale miners produce around 20
tonnes of gold per year in Tanzania according to a 2013 report by a
parliamentary committee — the latest official tally — but the vast bulk of that
is estimated to be illegally exported.
The state is hoping that as more
licenses are issued, the official trade will grow.
“Revenue has increased drastically …
the efforts are paying off,” said Gerald Mturi, executive secretary of the
Tanzania Chamber of Mines. “I expect big volumes to be reported at the end of
the year.”
Earlier this year, Biteko, the
Minister for Minerals, told Reuters the government had canceled around 1,000
inactive mining licenses and would redistribute them to small-scale miners.
He did not respond to requests for an
update on the planned redistribution of licenses.
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