Burundi is not making a profit from its minerals, what is wrong?
RegionWeek Newsletter Vol V, Issue #181 | Tuesday, July 27, 2021
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Dear Readers,
In a letter to the seven targeted companies of British, Chinese and Russian origin, Mines Minister Ibrahim Uwizeye said the Government of Burundi in East Africa has suspended operations at several mines run by international mining companies, citing an unfair share of income from the country’s mineral wealth.
“The state, which owns the soil and minerals, is not making a profit as it should,” the letter said.
Minister Uwizeye also described the mining contracts as ‘unbalanced’. The decision was taken earlier this month because of ‘numerous failures’ regarding Burundi’s mining code.
“We want to renegotiate all these agreements for the benefit of the people, because these minerals must be used to finance the development of the country,” he told media outlet AFP last week.
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Burundi is demanding a more equitable share of revenue from the Gakara project
UK-listed Rainbow Rare Earths, which operates the only producing rare earths mine in Africa, is reportedly the main target of Burundi’s judgement. It was ordered to halt exports of rare earth concentrates until the situation was resolved.
After the information leaked Rainbow Rare Earths shares ($RBW) tanked, losing 48% of their value. The company which is mining Burundi’s Gakara rare earths revised its future concentrate production estimates. Its Rare Earths exports amounted to USD 750K in the last quarter.
Rainbow, via a subsidiary that is 10%-owned by the Burundi government, operates the Gakara project in the country’s Western region.
Burundian researcher Steve de Cliff early this July told BBC that the Burundian government should be reimbursed, this was after a study conducted in Bujumbura province.
In the study, Steve de Cliff said they found that Rare Earths in the Kabezi commune of the province had a teneur content of 80%, while miners always told the government that it was 54%. The Burundian government has recently announced that it has found a significant loss in its revenue from mining, which is being mined by foreign companies, especially in Bujumbura province.
In April this year, Burundian Prime Minister Alain Guillaume Bunyoni told parliament that some foreign companies had been mining for almost four years but had not yet paid money to the state treasury. The companies' explanation, according to Minister Bunyoni, was that in the deep soil they did not have enough minerals to be found there as they had expected.
"Burundi expects to earn about $1.5 million from mining in the 2021 fiscal year... this is very little compared to what is exported," said Gabriel Rufyiri, president of Burundi's main anti-corruption watchdog Olucome speaking to AFP.
According to Proactive Investor magazine Rainbow noted that the Gakara Project in Burundi, is one of the highest-grade (47%-67% Total Rare Earth Oxide) rare earths projects globally and the only African producer.
The company began production of rare earth concentrates in the fourth quarter of 2017 and was ramping up to a targeted run rate of 5,000tpa by the end of 2018 and 6,000tpa by the end of 2019.
Sources told RegionWeek that the London-listed mining company is conducting negotiations related to Burundi's suspension of exports and its mining convention. Rainbow Rare Earths said in April that it wouldn't ship concentrate produced from its trial mine in Burundi after the government temporarily suspended its export.
Thanks for reading
Fabrice Iranzi, Editor in Chief | RegionWeek.com
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