Kenya’s steel makers lobby for zero rated fees to boost sector

Over 50 stakeholders in the steel sector have called upon the government to zero rate fees in a bid to boost the industry.

The stakeholders who converged for the first ever International Steel Forum in Kenya said that local steel industry is heavily dependent on imported raw materials.

The forum saw the stakeholders sourced from all over the world meet and focus on providing partnership opportunities to boost the sector’s competitiveness and developing frameworks of collaboration to better shape the future of the industry.

Speaking at the event, the Kenya Association of Manufacturers (KAM) Chair Mr Sachen Gudka noted that the local Steel sector has grown over the years, adding that the establishment of stronger partnerships with global investors, would be vital to attain the desired growth in the sector and the economy.

“The future of the sector looks at the development of Smart Infrastructure. Through data and employment of sustainable strategies the sector will spur the productivity of the country and the continent for the next generation.

We are at the juncture where our trade deficit continues to widen as a country, and the numbers in Steel are a clear demonstration of that. If we can forge stronger partnerships, with our global stakeholders finding opportunities to continually invest in Kenya, surely we can turn this around in a short amount of time,” said Mr Gudka.

He further stated that the realization of the targets set out under the Manufacturing and Affordable Housing pillars of the government’s Big 4 Agenda will require a significant input from the iron and steel sector, as it presents opportunities for growth.

According to data from the Ministry of Industrialisation, direct and indirect consumption of steel in Kenya is projected to increase as the country embarks on the development activities as envisioned in the Vision 2030.The major Vision 2030 projects include Lamu port development, railway and roads projects, housing, Industrial parks and the development of the special economic zones all of which utilize steel products. The Iron and Steel industry in Kenya forms about 13 percent of the manufacturing sector, which in turn contributes significantly to the GDP.

The local steel industry is heavily dependent on imported raw materials, as no local sources have been developed to date. The local deposits of iron ore and coal, which are the raw materials for the production of iron, that have been identified in several Locations in the country have not attracted commercial interest.

KAM Steel Sector Chair Mr Bobby Johnson highlighted that though the sector continues to grow, its full potential still remains unexploited, due to a variety of challenges including, high energy cost, Import Development Fees (IDF) and  Railway development levy (RDL) and illicit trade.

Zero Rating to improve sector competitiveness

“We have continued to lobby the government for Zero rating of IDF and RDL for all industry inputs to improve the sector’s competitiveness. In addition,  we are also keen on advocating for the development of clear procedures for smooth implementation of Buy Kenya, Build Kenya and local content – especially for large scale infrastructure projects with a high demand of steel.

If the Big 4 Agenda target to grow Manufacturing’s GDP contribution to 15% is to be met, we must address these challenges.  We remain resilient in engaging the government, with proposals to solve these issues, and anticipate that  favourable  changes shall be effected soon,” concluded Mr Johnson.

It is estimated that the country spends about 60 billion shillings (approximately 750 million US dollars per annum on importation of steel. This import bill can be reduced if high quality steel is produced locally. The development of the iron and steel sector has a spillover effect to other sectors of the economy and has the potential to create employment opportunities to Kenyans. A single steel plant of a capacity to produce 350,000 metric tons of steel per year can generate about 10,000 jobs not to mention the jobs created through other steel related activities.

Other production activities depend on imported hot rolled coils, used for re-rolling into cold rolled coils, which in
turn are processed into galvanized sheets, color coated sheets, bars, rods etc. In 2017, imports of iron and steel were 1.3 million tonnes valued at Sh83,580 million ($826.347 million). Iron and steel exports during the same year are estimated to have been 108,717 tonnes valued at Sh11,717 million ($115.754 million). The local deposits of iron ore and coal, which are the raw materials for the production of iron, have been identified in Kwale, Kitui and Tharaka Nithi but are yet to attract
commercial interest.

KAM is a Business Member Organization representing value-add companies and associate services in Kenya.  Its members’ significant contribution to the economy is estimated at a quarter of the country’s Gross Domestic Product. The Association provides an essential link for co-operation, dialogue and understanding with the Government and other key stakeholders by representing its members’ views and concerns through fact-based policy advocacy.

KAM promotes trade and investment, upholds standards, encourages the formulation, enactment and administration of sound policies that facilitate a competitive business environment and reduce the cost of doing business.

The Association houses the UN Global Compact Network Kenya chapter and its CEO – Ms. Phyllis Wakiaga is the network representative for the country.

Read Also: Kenyan manufacturers back government on recycling

Kenya’s crude oil to hit global market this year

The first batch is intended to test the international markets

Kenyan crude oil could test the global markets before the end of this year, latest developments indicate, as stocks of the commodity continue to pile up at a storage facility in the port city of Mombasa.

In its latest operational update for the period January 1-April 25, 2019, British firm-Tullow Oil plc (Tullow), says the first export cargo is expected in the third quarter of 2019, even as exploration and drilling intensifies in the Turkana region.

This comes as the Early Oil Pilot Scheme continues to truck 600 barrels of oil per day (bopd) to Mombasa, where 80,000 barrels of oil are being stored ahead of export.

READ:Kenya oil exports gains momentum as Tullow bounces back to profitability

The crude oil from the Turkana oil fields is being stored at the defunct Kenya Petroleum Refineries Ltd (KPRL) (refinery) facility at Changamwe, Mombasa.

“Following receipt of regulatory authority approval, which is expected shortly, production will be increased to 2,000 bopd, with the first export cargo expected in the third quarter of 2019,” the firm notes.

Tullow has been searching for buyers of Kenya’s small-scale crude petroleum exports since last year ahead of the first shipment, with a number of unnamed potential buyers said to have expressed interest.

“Tullow has begun to market Kenya’s low-sulphur oil ahead of the first lifting with initial market reactions being very positive,” Tullow said in a recent statement.

Petroleum Principal Secretary Andrew Kamau had earlier revealed that buyers from Europe, India and China had expressed interest Kenya’s crude oil, though the government remains mum on the exact potential buyers.

Sources within government revealed to The Exchange that the country has reached out to at least 18 global oil refinery firms for uptake of its first crude oil.

According to the government, the first batch is intended to test the international markets’ reception to the country’s crude oil before commercial production picks. Tullow plans to commit to commercial oil production later this year.

“Tullow continues to target a Final Investment Decision (FID) in Kenya by year-end although this remains an ambitious target,” the management said this week.

The firm is finalising its Front End Engineering Design (Feed) studies for the planned construction of a crude oil pipeline from Turkana to Lamu, where the country is developing its second major sea port.

“Tullow is finalising its FEED studies for both the upstream and midstream, and both the upstream and midstream ESIAs (Environmental and Social Impact Assessments) remain on track for submission to the National Environmental Management Agency at the end of the second quarter,” CEO Paul MCDADE said.

“The government of Kenya, via the National Land Commission, has gazetted the land required for the upstream development in Turkana and, so far, approximately two-thirds of the pipeline. Discussions with government regarding key commercial agreements are making steady progress. A late 2019 FID remains contingent on these key government of Kenya deliverables,” the management notes in its update.

Oil pipeline

Kenya is looking forward to the development of an 892-kilometre crude oil pipeline from the oil fields in the Northern region of Turkana to the Coastal County of Lamu.

Last year, Tullow hired Wood Group (Plc) to design the pipeline needed to pump crude from the Lokichar fields to Lamu, with commercial production and exports anticipated for 2021/2022.

The cost of the pipeline is estimated at USD1.1 billion (Ksh111.6 billion), with a further USD2.9 billion (Ksh 294.1 billion) needed for upstream operations.

Other investors in the country’s oil projects include Canada’s Africa Oil and France’s Total. Kenya’s government is expected to take a stake through the state-owned National Oil Corporation of Kenya (NOCK).

Australia’s Worley Parsons has been tasked as the engineers for Tullow’s oil blocks.

According to Tullow, the Amosing and Ngamia fields have estimated contingent resources of about 560 million barrels, with plateau production potentially reaching 100,000 barrels per day.

Tullow and its joint venture partners have proposed to the Kenyan government that the Amosing, Ngamia and Twiga fields be developed as the foundation-stage of the South Lokichar Development.

This foundation stage includes a 60,000 to 80,000 bopd central processing facility and the export pipeline to Lamu.

The installed infrastructure from this initial phase is expected to be utilised for the optimisation of the remaining South Lokichar oil fields and future oil discoveries, allowing the incremental development of these fields to be completed at a lower unit cost post the first oil production.

Total gross capex associated with the foundation stage is expected to be approximately USD3 billion (Ksh304.3 billion).

Last year, Tullow had earmarked USD70 million (Ksh7.1billion) for investment in its Kenyan operations.

The company has spent more than US$1 billion (Ksh101.4 billion) to prospect for oil and develop of wells in the country.

Kenya’s readiness

In March this year, President Uhuru Kenyatta signed into law a Bill outlining how oil revenues will be shared between the national government, counties and local the communities.

Under the new Petroleum Act, county government from where oil is produced will enjoy 20 per cent of revenue from petroleum operations, while five per cent will go to local communities living around the oil fields.

The national government will retain a bigger chunk which is 75 per cent of the revenue.

The law is expected to address concerns mainly by locals who last year paralysed the pilot evacuation of the commodity by road to Mombasa.

READ:Tullow Oil suspends operations in Turkana citing insecurity

The new law however halves the 10 per cent earlier awarded to locals in a previous bill passed by Parliament ( in 2016),  which went unsigned by the President.

On safeguarding and managing resources from oil and other natural resources, the government is working on a Sovereign Wealth Fund, expected to be in place before the country becomes a net oil exporter.

During his State of the Nation address on April 4, the President said his administration will be presenting the Sovereign Wealth Fund Bill during the current session of parliament, a move that could see the fund created before the end of his second term (2022).

The bill proposes creation of a Fund and provides a legal framework to guide the investment of revenues from oil, gas, mineral and other natural resources.

The Fund, as proposed in the bill, comprises three critical parts which include  a Stabilization Fund, an Infrastructure and Development fund; and a Future Generation Fund.

“We are a country blessed with natural resources, which, if properly managed, will transform in a big way our nation and the welfare of our people,” the President said, “It must be our solemn duty as a State to manage those resources sustainably for the fair and equitable benefit of both present and future generations.”

Sovereign Wealth Funds are state-owned investment fund’s whose source of revenue is most often balance of payments surpluses, fiscal surpluses and in particular resource revenues.

In February, the National Treasury invited Kenyans to give views on the draft Sovereign Wealth Fund Bill, 2019 and on Kenya’s draft Sovereign Wealth Fund Policy.

If implemented, Kenya will join the likes of Angola, Rwanda, Libya, Morocco, Nigeria and Botswana, African states which have establishing wealth funds in their respective countries.

Globally, Norwegian Sovereign Wealth Fund remains one of the best examples with a value of more than $1 trillion (about Ksh101.4 trillion).

Data by the Sovereign Wealth Fund Institute shows over 65 economies, majority of them resource-rich countries, own at least one wealth fund.

Lack of proper management of oil and mineral proceeds have been blamed for the never-ending resource-linked conflicts in Africa, with the resources being viewed as a curse rather than a blessing as millions lurch in poverty despite the continent being resource rich.

Multinationals and their respective countries have been accused of reaping billions by repatriating profits and raw commodity, with little benefit going to local communities and host nations.

ALSO READ:Rights bodies calls for greater scrutiny of Kenya’s Turkana oil revenues

 

 

Rwanda receives ALSF’s USD200 million Legal Support

ALSF signed an agreement to provide advisory services support to the government of Rwanda for the negotiation of its deal with Symbion Power.

Rwanda’s Lake Kivu is documented to harbour huge amounts of the poisonous yet useful methane gas estimated at around 55 billion cubic metres.

The naturally occurring methane gas found below the lake is just one of the resources the Rwandan government plans to exploit.

On March 29, 2019, the African Legal Support Facility (ALSF) signed an agreement to provide advisory services support to the government of Rwanda for the negotiation of its deal with Symbion Power.

Powering Rwanda from Lake Kivu

The negotiation with Rwanda is for the development of a USD200 million-dollar energy plant by Lake Kivu.

The energy plant is expected to generate an additional 56 MW of electricity for Rwanda, marking a significant step in Rwanda’s efforts to increase its installed power generation capacity by 291MW to 512MW by 2024.

The plant will extract methane gas from the production area at Lake Kivu and use it to produce electricity.

The Symbion Power project is part of a larger ALSF project providing assistance to Rwanda’s Ministry of Infrastructure (Rwanda MININFRA project), including support for the Nyabarongo II project, which will have a 43.5 MW generation capacity and will increase overall installed capacity by 11.5 per cent.

“The ALSF’s support to Rwanda, through the Rwanda MININFRA project, helps to ensure that Rwandans have access to energy, promoting sustainable development and inclusive growth. The project also ensures that the development occurs on the best possible terms for Rwanda,” said ALSF legal counsel and project task manager, Nchimunya Ndulo.

Rwanda’s USD400 million dangerous methane gas experiment

Seismic and geological surveys on the lake show that the gas could wreak havoc if the pressure of the gases in a lake exceeds the pressure of the water at a given depth.

Lake Kivu’s methane gas has remained untapped for fear over the safety of inhabitants until now.

Already, the US energy firm Contour Global-owned USD200 million KivuWatt is producing 26 MW of electricity for the local grid.

KivuWatt expects to inject another 75 MW in the next phase of its project by deploying nine additional gensets. This will bring the total capacity of electricity to over 100 MW for Rwanda.

Symbion Power is also an American company and the ALSF’s advisory services support will come in handy to ensure that the Rwandese government will not be short-changed as has been happening with many deals negotiated in Africa by international investors.

ALSF and the African Development Bank

The ALSF is an international organisation hosted by the African Development Bank (AfDB) Group.

It is dedicated to funding legal advice and technical assistance to African countries in their negotiation of complex commercial transactions, creditor litigation and other related sovereign transactions.

The ALSF also develops and proposes innovative tools for capacity building and knowledge management.

In March, Uganda ratified the agreement for the establishment of the ALSF becoming the 27th member state of the body.

ALSF is supporting the government to develop the Uganda Refinery Project and the East Africa Crude Oil Pipeline Project.

The ratification of the ALSF Treaty was driven by Uganda’s recognition of the value added by the ALSF’s interventions and by the growing need to further strengthen and improve the country’s legal capacities.

Better negotiated trade deals coming to Africa

In February, ALSF completed a two-day workshop for African lawyers and government negotiators.

The training is aimed at strengthening their capacity to negotiate complex deals involving investments in key economic sectors.

After the training, better-negotiated trade deals could be the way Africa goes cutting out lopsided negotiations which favour foreign investors disadvantaging African governments.

The workshop, co-organized with the African Business Law Firms Association (ABFLA) under the African Legal Support Facility Academy, was held in Accra, Ghana.

AfDB which prides itself as Africa’s premier development finance institution is on the ground in 44 African countries.

It contributes to the economic development and the social progress of its 54 regional member states.

You can also read how safe, controlled migration benefits African countries, Africa becoming world’s largest free trade zone and how the Congo River could power Africa.

South Sudan seeks investors in Johannesburg, SA

Afrexim Bank is providing a USD 500 million financing facility to fund power transmission, infrastructure and agricultural projects.

South Sudan is one of the key exhibitors at the Sandton Convention Centre in Johannesburg seeking to woo investors for its energy sector.

With this exhibition, African private sector participants have an opportunity to invest in Sudan’s peace.

This week the African Energy Chamber (AEC) will join South Sudan’s Foreign Affairs Minister Nhial Deng Nhial and his Finance counterpart Salvatore Garang Mabiordit for South Sudan’s global investment drive.

The South Sudanese Cabinet Ministers and business leaders will meet with the African Energy Chamber and other investors at the close of a 4-city global investment drive that previously took them to Washington, New York and Dubai.

Afrexim Bank power transmission financing

The South Sudanese delegation is notably made up of ministers from Agriculture, Mining and the South Sudan Investment Authority Secretary-General Dr Abraham Maliet Mamer, Nilepet Managing Director Dr Chol Thon Abel, and South Sudan Petroleum Commission Chairman Amb. Ceasar Marko.

The African Energy Chamber has hailed Afrexim Bank for providing a USD 500 million financing facility to fund power transmission, infrastructure and agricultural projects.

“We also commend President Cyril Ramaphosa and his Energy Minister the Jeff Radebe for committing USD 1 billion in oil and gas and infrastructure projects in South Sudan,” states a statement by the Chamber.

The AEC adds that these deals should be closed quickly as they will create opportunities for both the South African and South Sudanese people.

“We are hopeful that the arrival of the South Sudanese delegation to South Africa will result in even more investment deals being announced,” said Centurion Law Group CEO and AEC Executive Chairman NJ Ayuk.

He added, “Johannesburg is the financial capital of Africa and I am bullish that we will be able to raise more money to secure and promote lasting peace and investment in South Sudan.”

Urea, ammonia, fertilizer plants

The Chamber believes South Sudan’s leadership also has an obligation to creating an enabling environment of investors to put more money into the country.

To achieve these great benefits, South Sudan needs to safely open up new oil blocks to exploration especially to African investors.

“It is time to build refineries, pipelines, urea, ammonia, fertilizer plants, power plants, large agricultural fields and set up technology hubs.”

South Africa USD 1 billion investment in South Sudan oil

In November last year, South Africa’s Central Energy Fund and South Sudan’s Nile Petroleum Corporation signed an energy-binding contract that could potentially see South Africa invest over USD1 billion in South Sudan’s oil and gas industry.

South Sudan hosted a three-day South Sudan Oil & Power 2018 conference in Juba from November 20-22 attracting stakeholders from within and outside Africa.

The country is making drastic progress in the hope of awakening the struggling economy through peace agreements which assure potential businesses of security for their investments.

In January, South Sudan’s Ministry of Petroleum entered into a strategic partnership with the AEC for a technical assistance cooperation agreement to strengthen the country’s capacity to manage its hydrocarbons sector and wealth.

The country has a longer petroleum industry experience than the rest of East African countries and has over the past year demonstrated a commitment to peace.

This gives the country an opportunity to build long-lasting economic development and strengthen its engagement with the regional and international investment community.

African entrepreneurs in South Sudan

Recent discussions between AEC, South Sudan President Salva Kiir and his cabinet agreed that economic growth must be front and centre of the peace and recovery efforts of South Sudan.

AEC believes that securing investments is not the problem.

“Investors need an enabling environment and we are spending a lot of money to help South Sudan achieve that.  It is business that creates jobs and hope. Economic revival and business are the solution; not aid. Our leaders in government need to understand this. We cannot afford smallness in our drive for peace, Investment and stability when what South Sudan and most of Africa really need are big pragmatic common sense solutions,” added Ayuk.

The AEC says it will support South Sudan and its people while rejecting narrow agendas.

“We call upon all of African Energy Investors and corporate leaders to do the same. The Chamber will stand squarely with those who do.”

AEC is encouraging all partners and interested parties, especially African entrepreneurs, to attend the investment drive and seal business deals with South Sudanese public and private sector leaders who will be present at the Sandton Convention Centre in Johannesburg on April 24, 2019.

You can also read about South Sudan’s risk insurance hitting USD27.62 million and the country’s non-oil revenue hitting a new record.

Rights bodies calls for greater scrutiny of Kenya’s Turkana oil revenues

Civil societies in Kenya exploring underlying social and economical issues affecting Oil and Gas benefits in Kenya

Civil societies in Kenya have called for greater scrutiny of Kenya’s oil and gas industry to ensure there is maximum benefit both for the country as well as for the society. The issues raised during a media round-table in Nairobi included compensation, use of oil revenues and infrastructural development.

There is evidence of roughly 600 million barrels of oil in the two “blocks” of oil reserves currently being tapped in Turkana by a group of partners led by London-based Tullow Oil. But initially, production will be very limited pending construction of an 821-kilometer oil pipeline to a seaport in Lamu, Kenya, which is forecast to be completed by 2022.

However, Kenya Oil and Gas working group is calling for audit of the contracts of oil mining to ensure they follow international standards.

According to Charles Wanguhu, a social activist and is the  coordinator of the Kenya Civil Society Platform on Oil and Gas, in international practice, if a company prospects and fails to find oil, it meets its costs. However, if it finds oil, the country pays for the expenses.

Read also: Despite the Turkana fiasco, Kenya’s mines continue to dazzle China, West

Therefore, Wanguhu notes that in the case of Kenya, the need for audit will ensure that the costs in which Kenyans will pay for does not include for wells that did not yield oil.

“There are a lot of costs involved in this process including prospecting for different wells as well as a costly pipeline. Before any investment is made, there is need to evaluate whether this oil will be enough vis a vis the investments being made,” he noted.

There are estimates that with the pipeline complete and buyers secured, at peak production the Turkana oil field could generate up to $1.2 billion in revenue for the Government of Kenya. Under a law approved last year by the Kenyan Parliament, 20 percent of that revenue would be distributed to the Turkana County government and five percent to communities around the oil wells.

But there are many factors that will influence how much money Kenya sees from its oil. That includes fluctuations in global oil prices, which are currently at around US $65 per barrel. But over the last eight years, oil prices soared to a high of US $110 per barrel in 2011 and briefly dropped to as low as $26 in 2016.

Ikal Angelei, the executive director and founder of Friends of Lake Turkana (FoLT) noted that further scrutiny should be done on funds that mining companies are using for Social Corporate Responsibility as well as making local infrastructure like roads.

Read also: Kenya’s first oil truck leaves Turkana, transport trials begin

Kenya based Sawa Minerals launches Africa’s first blockchain minerals trading platform

Sawa Minerals works with small-scale miners who make a huge contribution to the global minerals trade by utilising blockchain-backed smart contracts

Sawa Minerals, a tech-driven company has launched a platform that will transform the lives of many African miners.

The blockchain backed smart contracts platform has been designed in such a way that it is easy to buy ethically mined minerals from artisans and small scale miners (ASM) across Africa and the developing world in a transparent manner.

The name ‘Sawa’ is Swahili for “fine”, “all good” or “no worries”. One of the co-founders Mr Kali Angwa said they settled on the name because it captures the purpose of the platform.

Sawa Minerals is a platform where stakeholders are not worried about fraud; where buyers are assured of ethically mined, genuine minerals; where miners are assured of decent pay. The platform will be guided by the principles of fair treatment of the planet, sustainability, conflict-free mining, fair pay, and protection of human life.

Read also: Kenya seeks mineral market in the United Arabs Emirates

The ultimate goal of Sawa Minerals is to bring transparency, and ensure that artisans and small-scale miners are part of an inclusive value chain that will transform their livelihoods.

It is a sad reality that small-scale miners in Africa and the rest of the developing world make a huge contribution to the global minerals trade yet they remain poor, exposed to hazards and the constant threat of conflicts. Sawa Minerals challenges this status quo.

Speaking during the launch in Nairobi, the CTO and Co-founder of Sawa Minerals, Mr. Kali Angwa, said artisans and small-scale miners in developing countries will now have the opportunity to be part of an inclusive platform that respects and puts their needs first.

Mr. Angwa said Sawa Minerals is committed to inspiring an ecosystem that will shape the future of ethical mining, one that is free of child labour, where the ASM community will work in safe conditions and earn life-sustaining income.

“Artisanal and small-scale mining is an important supplier to key sectors of the global economy including manufacturing, construction, jewelry and and electronics. For example, if all of the world’s ASM community stopped working today, the world would suffer a shortage of 20% gold, 20% diamond and 80% of global sapphire. They deserve to be treated well. “, said Mr. Angwa.

Read also: Why Magufuli`s government might succeed in fixing mining sector

“Like my fellow small-scale miners here, I am very happy to see the entry of Sawa. This platform will help alleviate the extreme poverty we live in and eliminate exploitation that is everywhere around our community” said Joshua Ochieng, a small-scale gold miner in Migori, West of Kenya.

All licensed artisans and small-scale miners as well as buyers and traders can sign up with Sawa Minerals by visiting https://sawaminerals.com and registering.

Sawa Minerals will also play an active role in guiding the miners to become compliant with their countries’ regulations. This is one of the measures the venture has put in place to ensure that buyers and the ASM community engage in transparent trade that is free of worries, remaining true to the meaning of Sawa in Swahili!

Sawa Minerals affirms that organizing the artisans and small-scale miners in one inclusive platform will bring many advantages not only to buyers and ASM members but governments as well. It will enhance government’s’ ability to improve earnings from the mineral deposits available in their countries and bolster their GDP.

Read also: First gold bullion in East Africa launched in Tanzania

Also Read how Kenya seeks mineral market in the United Arabs Emirates

Acacia registers decline in gold output

Acacia Mining Plc has registered a 13 per cent fall in gold production for the first quarter of 2019, attributing the decline to lower output at its North Mara and Buzwagi mines.

The company`s Interim CEO, Peter Geleta said in a statement accompanying the quarterly report that gold production stood at 104,889 ounces , with ounces sold for the quarter standing at 104,985 ounces and in line with production.

Production in the first quarter was affected by unanticipated production issues at North Mara, which produced 66,324 ounces of gold for the quarter, cited as a 14 per cent year-on-year decrease.

The lower output was mainly driven by the consequence of a fall of ground in the Gokona underground mine in December, as well as an excavator breakdown in the Nyabirama open pit.

The fall of ground at Gokona prevented access in the quarter to two higher-grade stopes in the east, impacting mine sequencing and head grade which, at three grams per tonne, was 19 per cent lower year-on-year and below expectations of the quarter.

The miner has since taken steps to address the issues at North Mara, including the introduction of a revised mining plan in mid-March for both the underground and open pit mines.

Meanwhile, the Buzwagi mine produced 28,577 ounces for the quarter, a 20 per cent lower year-on-year but in line with expectations, as a result of the mine having fully transitioned to a lower-grade stockpile processing operation.

The Bulyanhulu mine, however, produced 9,999 ounces of gold for the quarter, a 17 per cent year-on-year increase and in line with expectations, owing to the higher grades recovered from the retreatment of tailing, as well as improvements in plant throughout.

All production continued from the retreatment of tailings as a result of the mine being placed on reduced operations in late 2017. In 2017, Acacia was hit with a Tshs.437 trillion ($190 billion) in which Tshs.92 trillion ($40 billion) was in unpaid taxes in a 17 year span between 2000 and 2017, and additional Tshs.345 trillion ($150 billion) in interests and penalties. Acacia`s concentrates were banned from exportation, until the company reached a settlement with the government to pay Tshs.690 billion ($300 million), an amount that has not been paid up to now.

The miner similarly said its cash balance as on March 31, stood at about Tshs.277.7 billion ($99 million), representing a decrease of net cash of about Tshs.39.1 billion ($17 million) during the quarter, primarily as a result of lower production.

Throughout the quarter, Acacia continued to engage with its parent company, Barrick Gold in its direct negotiations with the government. The company anticipates receiving a detailed proposal for a comprehensive resolution of its disputes with the government once Barrick`s negotiations have been concluded, the report indicated.

Despite the challenges, Acacia remains confident that it will deliver against its full year production guidance of between 500,000 ounces and 550,000 ounces, it concluded.

Also read: Acacia Mining holds its ground even after Magufuli and Barrick Gold truce

 

Orca and Swala Oil terminate agreement

Orca Exploration Group has announced termination of its investment agreement with Swala Oil and Gas (Tanzania).

A statement from Swala Oil notes that pursuant to the terms of its investment agreement dated December 29, 2017 with Orca Explorations Group Inc in respect of PAE PanAfrican Energy Corporation (PAEM), the parties have agreed to terminate the Agreement as a result of Swala not acquiring additional shares in the capital of PAEM.

Swala continues to hold 7.933% of the issued and outstanding shares of PAEM through the Company’s subsidiary Swala (PAEM) Limited.

Meanwhile Swala Oil is in discussions with a US-based emerging markets institutional investor for US$75 million in acquisition funding for a transaction.

“In furtherance of this possible transaction, Swala is currently finalizing terms for its funding, which when completed is expected to lead to financing agreements within the next weeks.” A statement from the oil and gas company in Tanzania reads in part.

According to Swala Oil CEO  Dr. David Mestres Ridge , after considerable due diligence and engagement, the Company is finalizing commercial terms for an investment of US$75 million with an institutional investor with extensive experience in emerging markets.

“This capability, when formalised through to definitive agreements, should allow us to contemplate an additional transaction. There can be no guarantees that the financing or transaction contemplated, or any other, will be completed and the Company shall update the market as appropriate.” Said the CEO.

Shanta Gold to fund gold mining in Tanzania

Shanta Gold Limited, the East Africa-focused gold producer, developer and explorer, has provided an update on its plans to finance the Singida Gold Mining Project in the Singida Region that lies in central Tanzania.

The company is to float its Singida gold mining asset in Tanzania on the Dar es Salaam Stock Exchange (DSE). The gold miner wants to raise Tshs.46 billion ($20 million) to develop the Singida gold mine, with the Initial Public Offering (IPO) expected to take between 6-12 months. The funds will be used for key infrastructure requirements in place including water, grid power, resettlement and an operating camp.

Shanta Gold will retain at least 51% ownership of Singida and will operate the project with the money to be used to start production and for exploration to expand the resource.

An internal study at the end of last year estimated gold production of 28,000 ounces per year for six years at an upfront cost of Tshs.43.7 billion ($19 million). Cash costs were projected at Ths.1.8 million ($794) per ounce.

Eric Zurrin, the chief executive of Shanta Gold, said using asset-level financing unlocks value for Shanta Gold shareholders while also allowing it to retain a controlling interest. He added that he had been encouraged by the initial feedback from institutional investors across East Africa who are seeking US dollar linked investments in support of industrialization. The IPO will also offer Tanzanians a rare investment opportunity within their own mining sector.

Besides the Singida gold mine, Shanta Gold owns the New Luika Gold Mine located in the Lupa Gold Field in Mbeya Region, south west of Tanzania. The mine started gold extraction in 2012, producing 81,873 ounces of gold in 2015.

Gold reserves in Tanzania are estimated at about 45 million ounces with gold exploration centered mostly on the greenstone belts around Lake Victoria. Gold production in Tanzania stands at around 50 tonnes per year which makes it the 4th largest gold producer in Africa after South Africa, Ghana and Mali.

Also read: Shanta Gold on track to meet full year guidance of 85,000 oz at cost of $850/oz