Optimism as global gold prices rise

Dar es Salaam. The government is optimistic that a recent improvement in gold prices will trigger more investments into the sector and stimulate economic growth.

With a decline in prices, gold lost its dominance to travel earnings and manufactured goods as Tanzania’s top foreign exchange earner.

For instance, gold exports dropped from $1.6 billion to $1.32 billion and to $1.3 billion in 2013, 2014 and 2015 respectively. During the same time, earnings from travel rose from $1.8 billion, $2 billion and to $2.2 billion in 2013, 2014 and 2015 respectively, official Bank of Tanzania figures show.

This was after gold prices dropped from as high as $1,900 per ounce to in 2011 to as low as $1000 per ounce during the past few months, a situation that saw producers in Tanzania laying off some of their workers while others were even planning to shut down some of the mines.

But the commissioner for minerals in the Ministry of Energy and Minerals, Mr Ali Sameja is now optimistic that recent increases – whereby the price of the product now ranges between $1,200 and $1,300 – will inspire investors to invest more.

“Investing in the mineral sector is expensive and therefore investor are normally cautious of venturing into the business…However, since prices have been in an upward trend, more investors - both local and foreign - are now showing interest of injecting their money into the sector,” he said. Some of the mines that are yet to start operations are located in Singida, Igunga Sekenke, and Chunya.

Increased investments will create new jobs and help the government to collect more taxes in form of Pay As You Earn, royalties and corporate tax which normally pegged on the amount of profit that a business entity registers in any given period.

According to the public relations and communications manager for Geita Gold Mine (GGM), Mr Tenga Tenga, the company had to undertake several measures to sustain its operations amid declining global gold prices.

The aim was to extend the life of the mine and improve the quality of the mines production base despite gold price instability.

“The overall strategy of sustainability is based on improving free cash flow and is ably supported by our operators and all other functions within the business, who continue to focus on improving margins to enhance the overall quality of production, cash flow, returns and our social license to operate,” he said.