Rwanda Mining-Export Income Drops on Lower Tantalum Prices

Sep 01, 2014 4:34 am ET

(Adds details on conflict-mineral reporting starting from fifth paragraph.)

Sept. 1 (Bloomberg) -- The value of Rwanda’s mineral exports dropped by almost a fifth in the first half of the year, even as the volume of sales rose, because of a fall in tantalum prices, State Minister for Mines Evode Imena said.

The East African nation generated $93.5 million from shipments of minerals, compared with $114.9 million in the same period last year. The volume exported climbed 13 percent to 5,200 metric tons.

“Tantalum prices will definitely affect this year’s mining revenue,” Imena said in an e-mailed response to questions on Aug. 29 from the capital, Kigali.

Rwanda played a “significant role” in the world’s production of tantalum, a metal used in mobile phones and video- game consoles, accounting for about 12 percent of global output in 2012, according to the U.S. Geological Survey. Prices of tantalite, a tantalum-bearing ore, declined to an average of $80 a pound at the start of this year from $124 a pound in June last year, before recovering to about $100 a pound by the end of June 2014, according to data compiled by U.K.-based Metal-Pages and Argus Media Ltd.

A U.S. law on conflict minerals enacted this year requires American companies that use tantalum, tin, tungsten and gold to report whether they sourced the metals from the Democratic Republic of Congo and adjacent countries, including Rwanda.

Conflict Minerals

Armed groups and some members of the Congolese army have financed their rebellions and enriched themselves through mineral sales, according to a United Nations group of experts report published in January. Rwanda is a transit point for smuggled minerals, U.K.-based advocacy group Global Witness said in 2012, even after the nation began tagging and tracing programs. Imena said in May that Rwanda’s minerals are conflict- free.

Rwanda is struggling to meet its goal of increasing total foreign investment in mining to $500 million by 2018 from $150 million in 2012 and more than triple the industry’s contribution to the economy to 5.3 percent, the World Bank said in a report last week. Mining is the largest source of foreign exchange for the $7.5 billion economy, according to the bank.

The government has issued 548 mining permits to 213 companies, though most operations are small investments valued at less than $100 million each. All rely on manual labor to extract the metals with only a few using equipment such as bulldozers and explosives, according to the World Bank. Five operations are owned or jointly operated by foreign investors, it said.

Fluctuating Prices

The mining industry’s performance in Rwanda is “intrinsically vulnerable to fluctuations in international commodity prices, which is evident in the results” from the first half, according to the World Bank.

Revenue from tantalum dropped to $40.9 million in the first six months of the year from $69 million in the same period of 2013, while sales of cassiterite, or tin ore, fetched $38.8 million from $31.4 million. Wolfram, which contains tungsten, earned $13.8 million, down from $14.4 million.