Mkapa defends Tanzania's minerals policy

Geita, Tanzania - Tanzanian President Benjamin Mkapa on Thursday defended his government's generous minerals policy against opposition critics who say the country has sold its resources too cheaply to foreign mining companies.

Foreign mining investment was key to the country's economic development, but Mkapa said international companies also had a responsibility to the local environment and job creation.

The Tanzanian leader is facing presidential and parliamentary elections in October and opposition critics have accused the government of giving away mineral deposits through low royalties and other financial incentives.

"I am conscious of the criticism I am subjected to by some of my political opponents and compatriots that in an attempt to woo investors I have given away too much," Mkapa said in speech to open officially the Geita gold mine in northwest Tanzania.

Geita is a 50-50 joint venture between Ghana's Ashanti Goldfields and South Africa's AngloGold and will be East Africa's biggest gold mine when it reaches full annual output of 500 000 ounces annually by 2001.

"Much as I understand the concerns of those who wished the government to mine gold itself, or take a larger share of the proceeds, I believe the path we have taken is a better alternative," Mkapa said.

"We will continue to nurture the kind of investment climate that will enable us to turn the mineral wealth underground into a catalyst for rapid growth and development of our country and its people," he added.

Foreign mining companies have praised Tanzania as a model for other African countries eager to attract mining investment. Tanzania has modernized its mining code and issued at least 200 mineral exploration licenses to local and foreign firms since 1997.

Several new gold mines are expected to boost the country's gold output to one million ounces in 2001 from around 250 000 ounces this year.

Mkapa said his government's goal was to raise mining's contribution to the country's GDP to 10 percent in the medium term from the current 2.1%.

Aside from Geita, the Golden Pride mine opened in 1998 is producing over 220 000 ounces of gold a year, and two other mines are under construction. Canada's Barrick Gold is expected to bring its Bulyanhulu mine into production in the first quarter of 2001 with output above 400 000 ounces of gold annually.

The North Mara mine owned by Australia's Afrika Mashariki Gold Mines will cost $80 million to build and produce 200 000 ounces annually towards the end of 2001.

Critics have said a generous minerals policy would damage a fragile environment and create few jobs. Mpaka issued a challenge to mining executives to help him address these issues.

Companies would have to ensure the environment was protected during mining activities and increase their sourcing of supplies from local businesses.

"If you do not give them a chance they will never have the experience to be competitive and this could brew unnecessary resentment," he said.

He also pressed Ashanti and Goldfields to provide more skills training at the mine, where 85% of the 600-strong workfore is Tanzanian, but are at the lower end of the mine hierarchy. "And they will remain there if we do not invest in more training and skills development," he said.

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