Rich country, poor people: what Tanzania Govt. is doing wrong Friday, 11 March 2011 05:54 THERE is a serious misconception among earth sciences’ experts (geologists, geophysicists, mining engineers etc) as well as policy-makers especially in our countries, i.e. Third World countries primarily in Africa — Tanzania being a case in point — that green-field exploration for hard-rock minerals is costly and risky. It is indeed true that hydrocarbon (oil & gas) exploration can yield tremendous results, with huge profits earned upon exploitation of the discovered reserves. But, the same is today equally true of hard-rock minerals exploration. Most minerals existing in Tanzania and their locations, including Uranium, are well known to specialists including our own experts in Tanzania, not only the Mkuju River deposits. In fact, I recommend the govt. to send our experts to areas with similar geology to the one at Mkuju, in Southern Tanzania (Songea and Namtumbo areas), in Central Tanzania (Dodoma, Manyoni & Mbuga areas) as well as to the Minjingu Phosphates in southwest Arusha to look for more of this mineral since Uranium may also be found in phosphates}. What we are supposed to do in this case is to contract foreign exploration and mining companies to explore and mine the minerals while we retain full (100 per cent) equity ownership of the deposits. The foreign companies should work under strict terms of reference spelled out by Tanzanian experts through their government. This is exactly what the Middle East and other oil-and-gas producing countries are doing while retaining 100 per cent ownership of their mineral assets.Norway — a European Union country and one of the most affluent free-market economies in the world — also restricts majority ownership of its huge oil-and-gas assets to its local companies STATOIL and NORKS HYDRO. The same is being done by the oil-rich Middle Eastern countries of Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, Oman, Iran and Iraq. We see the same trend in Latin America (Venezuela, Bolivia, Ecuador, Brazil et al).Russia has passed legislation effectively banning majority ownership by foreigners of what it deems strategic assets, be it in the mineral sector, in oil-and-gas, in telecommunications, in the nuclear sphere, in Space, High-Tech industries, et al… Russia fundamentally changed its law on natural resources, restricted — and in some cases, even banned Production Sharing Agreements which used to be the model contracts for its oil-and-gas exploration and production agreements in the 1990s. It also made similar approaches to exploration and exploitation of its hard-rock minerals (ferrous, non-ferrous and precious metals as well as precious stones, non-metal hard minerals like coal, etc), making it impossible for foreign companies to ever again own majority equity in its natural resources and strategic assets. Brazen political decisions were taken despite criticism from foreign companies and their host countries that Russia is playing a rough game by limiting foreign majority equity ownership in its natural resources, including minerals. But, in the end, Russia proved to be right since it was able to recoup and recover its mineral assets scooped earlier by foreign companies, some craftily, some by mere shrewdness in collusion with crafty Russian state officials and wheeler-dealers who later on went to become the highly despised Russian Oligarchs now numbering 114! Russia decided to retain majority equity stakes for the State through its firms (GAZPROM, ROSNEFT, ALROSA, GAZPROMNEFT, etc) as well as Russian-registered and Russian-owned private companies (RUSAL, INTERROS, POLYUS GOLD, NORILSK NICKEL, METALLOINVEST, NOVOLIPETSK STEEL, MAGNITOGORSK IRON & STEEL WORKS LUKOIL, NOVATEK, BASIC ELEMENT, URALKALI, SEVERSTAL, EVRAZ etc) which pay their huge taxes in Russia thus allowing the nation to earn huge income in foreign exchange. This, in turn, enabled the government to re-distribute and spread wealth among its citizens through self-financing of its national budget, increasing pensions and other social benefits (cheap education, transport and medical services) as well as creating a sovereign wealth fund (which, in February 2008, was divided into the Reserve Fund and the National Welfare Fund). This pretty well helped Russia successfully navigate this turbulent period of the global economic and financial crisis without going begging for alms from foreign nations and the international financial system contrary to what we saw, and are still seeing, in Greece, Iceland, Spain, Portugal, Italy and other countries of the European Union. While retaining majority equity ownership (not less than 51 per cent) of our mineral resources in Tanzania, we can then offer a minority share to a strategic investor/s who will be subject to finance the exploration and exploitation/mining of the deposits, offer the necessary technical, technological, financial and managerial expertise and skills needed to effectively exploit/mine the deposits — including training local experts. The expenditure for such exploration is peanuts (some few millions to several tens of millions of US dollars). But, the outcome of this expenditure, call it risk, is minuscule compared to the benefits earned as the Mkuju River uranium project has shown. Mantra Resources might have spent a maximum of US$10 million or less (or to quote unsubstantiated remarks: up to $30 million). But, it is selling the asset for over US$1 billion, thus reaping a profit of over 10,000 per cent! This a return of investments for a period of a mere 1-3 years of working to appraise the Uranium deposits at Mkuju! What other proof of affordable risk does our Govt. need to convince all of you that it is worth investing ourselves in exploration of our vital and strategic mineral deposits like Uranium, Oil, Gas, Gold, Nickel, Diamonds, Tanzanite and own them 100 per cent and only offer minority states to swap for financial investments and management of these resources? Tanzania is now ready to throw away Tsh94 billion (US$ 64 million) on a bogus contract in the Richmond/Dowans-Tanesco saga which has nevertheless left the country with no electricity, but not ready to spend a tenth or fifteenth part of that sum (about US$6-10 million) on exploration and appraisal of such assets like the Mkuju River Uranium — and, in return, own an asset worth over US$1 billion, with the potential to tap into even much huger reserves as we continually appraise the asset itself or similar ones existing in Tanzania! This is the paradox of how a Tanzanian, an African, thinks! That is why, in Russia (and elsewhere, too), there is a very unpleasant perception of an African. And, this crops up whenever Russians comment about Africans especially when they see our leaders on TV and the press who come here on begging visits. They call them: “these people/leaders from ‘exotic’ countries… Exotic not only because they come from countries with simba, fisi, tembo, tumbili and vifaru, but exotic in their way of thinking. They (the Russians) argue that these people (African leaders) always come here to beg for assistance, sometimes even petty assistance, in return giving their mineral and other assets almost for free… Russians would never allow such a thing to happen with their Uranium or whatever mineral assets the way we are now ceding: cheaply, even almost freely, in fact, throwing away our rights over the Mkuju River uranium deposits… The same thing our old chiefs did, exchanging/throwing away our territories including minerals and slaves for bangili, vioo, hereni, mikufu, etc. This led to the colonization and enslavement of Africa! Just imagine, our Mkuju River Uranium deposits were taken from us. I don’t know how much Mantra Resources paid the Tanzanian Govt. to acquire the prospecting, and probably, mining licenses there, but I think it could hardly have been more than US$200,000. Quite possibly, Mantra Resources never even paid any Signature Bonus since it was not demanded from them by our Govt.! Then the company spent a few hundred thousand or a million US dollars – finally selling the asset for over US$1 billion US$! And the Tanzania Govt. and its people don’t own anything in the mine… Nor do they have rights to determine what those assets could do to benefit them in, say, nuclear power generation or going high-tech! What other explanation do you need here to refute that we are indeed ‘exotic?’ How can we forfeit such opportunities to make ourselves rich, create huge wealth and tap abundant capital ourselves, instead of going around begging for alms like budget support peanuts? Just compare what we are now begging for with what we have forfeited in the Mkuju River Uranium deposits — as well as earlier on in the gold assets stupidly handed over cheaply, even almost freely, to Barrick Gold, shares of which were then floated in London, earning the company and its shareholders (including the crafty silent Tanzanian millionaires) billions of US dollars with nothing going to the majority of the poor Tanzanians, including me and you, who are the true and real owners of the assets..! Shaaban Nzori, Moscow, Russia.
Posted on: Tue, 11 Jun 2013 09:30:36 +0000
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