Forming a commission to conduct a detailed inspection and study of gold concentrate that was lined up for shipping out, and now acting on its findings and conclusions, it is clear that the old mining sector regime can’t work as before. It is thus unclear if foreign investors in the sector will put up with the new conditions, with their activities now entirely transparent.
That the foreign investors will find it hard to put up with the situation was clear from the moment the president ordered a stop to export of mineral sand as it is often called, whereupon Acacia Mining, the leading mining sector foreign company, said after a few days that it was losing around one million dollars per day on account of the concentrate export ban.
Within a short while it was being reported that the share value of the firm was in steep decline in its London listing on the stock exchange, and this while it has all this while been believed that the sand was a minor addition to its declared results. Did it matter so much?
It is this immense feeling of loss which started to raise awareness among local observers, that clearly the president had a point in his suspicions that there is massive theft being conducted by exports of mineral concentrate.
It was all too apparent that stakeholders of the company .treated the matter with far greater importance than the public was being made to believe in the country, where concentrate is seen as an auxiliary to the declared gold mines and bars sold, earnings declared and revenues paid.
The point is that the company now has an alter ego in the president, as he knows the chemistry of it all, a doctorate holder.
If anything this is where the company has hit a fork on the road as the adage goes, as earlier it was a matter of advisers informing the president if there was a problem, and advising what to do about it, whereas right now it is the president who thinks out all of it.This much is contained in a video that went viral around a month ago that showed the president in intense discussion with a number of close friends or associates, including former Home Affairs minister Charles Kitwanga.
The latter appeared to believe that things can’t be changed whereas the minister, not yet seeking CCM nomination, believed they could.
For those who know the blood soaked history of mining on the African continent, the systematic changes that the president signaled with regard to gold mining and other areas in the country is like revenge on the part of those who struggled to bring this sector under control.
Mining is the worst sphere of subversion that new countries in Africa have faced, for instance the killing of independence leader Patrice Lumumba in the Congo as having to do with trying to control the Belgian mining giant, the Union Miniere du Haut Katanga (Mining Union of High Katanga). It linked up with conservatives seeking provincial autonomy.
There have been countless wars in the Congo and in a number of West African countries where minerals were the issue, and especially diamonds, as rebel groups sought to control sources of the mineral so that they can finance their overall scheme of taking over the state.Angolan rebel nationalist leader Jonas Savimbi fought a war to control diamond mining areas at the centre of the country, and with his death the war also ended.
In Tanzania gold mining has been a huge boost to state coffers since the 1990s as it ended the dependence on crops, while tourism was still budding; we are now being informed of its real potential.
It is altogether noticeable that this change in the way the mining sector is being run can take place with the least of danger that Acacia Mining and its associates could be in a position to block it, as all they can do is to suffer share sales back home, if its profits stand to diminish significantly.
But, unlike at the time of independence, not much danger is on the horizon at the political level, despite that Tanzania has always had a better political condition in the contention with foreign economic interests, as noticed in the days of the Arusha Declaration. Banks and farms were nationalized with barely a whimper, aside from aid losses.
Obviously it will not be easy sailing as major companies have ways to alter a country’s fortunes in a market when there is a massive disturbance like the one that the president is sending on the doors of Acacia Mining and the Barrick Gold (UK) shareholders, and US associates among others.
Yet that ability related to oligopolistic markets (with a few buyers more or less controlling the market) from the end of WW2 to the 1970s, before new markets arose in East Asia and central Europe among others. Now the main market for gold is likely to be India and China rather than Europe and the US so they can’t gang up.
At the political level, the tone of what the president said and did in receiving the report of the commission had a resonance with the Arusha Declaration, or the TANU Guidelines of 1971, ‘we have been exploited a great deal, we have been oppressed a great deal, we have been humiliated a great deal, now we want a revolution so that we are never again the victims of these ills.’
It is a revolution that the president is now pushing in the mining sector, first clearing out allies of the major foreign companies from their desks, and then checking if they were duly rewarded for their failure to notice that anything was amiss in concentrate sand exports. It more or less ends the debate on mining sector contracts with foreign firms, but differently.
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