Although much of the mining activity in the country is undertaken by artisanal or small-scale miners (ASM), many of these miners work together in local cooperatives. However, more than 200 mining licenses were denied by the government, the majority of which belonged to these groups. The Rwandan government claims ASM cooperatives have unsafe mining practices, which it is attempting to improve. The minerals sector, which the government is aiming to streamline, has been the subject of illegal activity and investor disputes. These disputes arise from disagreements with the investors after they failed to meet standards. Investors claim that the government broke its obligations to the contracts and accuse it of nationalising its minerals sector.
Despite these allegations, several mining contracts were awarded to local and foreign investors. The Karuruma smelter, operated by LuNa, a joint venture between Polish company Luma Holdings and Rwandan investment firm Ngali Holdings, was one of the few awarded a mining license. This license contains eight mining exploration licenses, which contain prospective areas for cassiterite (tin) and coltan (niobium-tantalum). The company is expected to invest at least $14.4 million over the four year contract. Also awarded a contract was Paragon Mining Industry, a Chinese investment which plans to bring $5.2 million to the country over the lifetime of its five year exploration license.
Our View: The Karuruma smelter, which was reopened in March this year, is part of the Rwandan government’s plan to prevent the country from being at the mercy of the volatile metals markets. The governments hopes that value-added products will help to stabilise the economy. However, the smelter is currently running below capacity, according to officials, despite being able to accept both tin concentrate and tin scrap. The move by LuNa into minerals exploration appears to indicate that the company are looking to address the feedstock issue, and should result in stable production from the smelter.