Govt evicts small-scale gold miners as dispute escalates

Dar es Salaam. The government is likely to incur loss in a Handeni Gold Mine project, following the invasion of illegal miners at the site, which has prevented the investor from developing it.

As a result, the government says it looks for an alternative solution to illegal mining because if they continue mining at the site they will deplete the gold resource. A few days later, the government reportedly evicted the illegal miners from the site amid protests from some quarters within the society.

Global gold price is currently fetching about $1,300 per ounce, a slight increase from between $900 and $1,100 that had affected the market gold price in previous years and, therefore, if the mine was operating well it could have been fetching a substantial amount of revenue.

A geologist in charge of the project, Mr Denis Philip, told BusinessWeek recently that they were facing challenges to develop the mine due to the encroachment of illegal miners on its Handeni site.

Canaco Tanzania Limited, a subsidiary of East Africa Metal Inc, a Canadian firm that focuses on gold and base metal exploration in East Africa, has invested in Handeni Gold Mine Project for a number of years without having access to it.

“Despite an order from the Ministry of Energy and Minerals, the invaders have refused to vacate,” he said.

He said before proceeding with relevant developments at the mine, the investor needed to know whether the project was still feasible as the illegal miners had been at the site for a long time and taken part of the minerals. According to him, if they don’t leave soon, the project will no longer be worth investing in. He stressed that if the project failed the government would not be able to receive revenue in terms of royalties, corporate tax, while explorers would also not glean anything from the site.

In view of this, he called on the government to move in and save the project as almost all the rocks had been destroyed, thus making it more expensive for exploration either through an underground or an open pit system.

The company, which has been in Tanzania since 2006, has been looking forward to developing the project since 2013. The company was in its initial process to sign a deal with one of the developers, but illegal miners invaded the site and put everything at a standstill. The company has been exploring in Handeni since 2007 and has invested over $60 million in the project and more funds are required to be injected for mine development.

Initially, mine development capital was estimated at about $100 million. However, with the problem they could be forced to significantly scale down initial investment costs to get the project started. For his part, the ministry’s commissioner, Mr Ali Sameja, said the investor had acquired all the rights to invest in the mine.