Wednesday, June 13, 2012

The Prospects and Challenges of the Mining Sector in Cameroon

Dr. Fuh Calistus Gentry Secretary of State for Mines, Industries and Technological Development optimistic about the mining sector in Cameroon
Dr. Fuh Calistus Gentry is the Secretary of State for Mines, Industries and Technological Development and a Geologist, on Sunday June 5, 2012, Dr. Fuh Calistus Gentry was guest over the CRTV morning program, Cameroon Calling. He spoke vividly and with a lot of admiration on the diagnosis and challenges of the mining sector in Cameroon. As an expert miner, he talked elaborately on the various mining deposits in the country; the role big investors can play as well as the artisan mining in developing the sector. Here below are the excerpts of the Interview (Courtesy of Cameroon Calling)

Your Excellency, let’s know a little about the mining potentials of Cameroon.
Dr. Fuh Calistus Gentry: Cameroon is sitting at the centre of a huge iron ore belt, within the Central African sub region; deposits in Gabon, Benin, Congo and then deposits lined-up from Mbalam right to the coast in Kribi. In fact, iron ore deposits are being investigated even in the North West region. Let me indicate there that the industrialization process in America is centred around the Great Lakes: (belts where the iron and steel industry is developed).
So this is a new phenomenon, which is striving everyone out here. Today, the Chinese are almost buying out the Australians, a comity we had the concertion initially, were almost a monopoly in this domain. It is a phenomenon that is attracting the world to Cameroon, not withstanding the fact that we also have some key world class deposits, like the nickel-copper deposits, uranium, diamonds, etc.
This has made us a place where everybody thinks he is missing out something which is not here.

You have been talking so much about foreign companies coming: are they no Cameroonians in this sector in terms of the finances to carrying out either exploration or exploitation and in terms of the know-how
Dr. Fuh Calistus Gentry: We are not really reinventing the will. Mining starts with the small people taking up licenses, doing what they can; inviting bigger people to come-in. presently we have slightly over 160 exploration licenses. Most of these belong to Cameroonians. But most of them are dormant because they do not have requisite capital to carry out exploration. Ventures like the ones I move along with many mining companies are meant to bring investors to get involved in what Cameroonians have initiated.
If I say the Mbalam project is worth $5 billion: this is not the kind of ventures Cameroonians would get into. But the artisan industry is robust in the East which is entirely a domain where Cameroonians are working with an outfit known as CAPAM.
But wherever in the world, the small players always start the game and somewhere along the line, the bigger boys get in. This is just what is happening here.

Let’s compare the mining and forestry sectors: with the forestry, there is a percentage to do here in Cameroon and another percentage out. Does this apply same with the mining sector?
Dr. Fuh Calistus Gentry: I have played a very active role to revise the mining code recently. In this new revision, we have a sloth in which 15% must be transformed locally (for example for 35 million tones of iron produced in one mine in a year, the new code demands that 15% must be transformed locally). We are not ending there.
We have taken initiatives where recently, the Korean company by the name ‘POSCO’ one of the largest iron and steel industrial concerns in the world signed a memorandum of undertaking with us.
We are also developing a project known as ‘FECUNA’. Iron in the scientific name is ‘Ferus, cobalt, nickel, aluminum, whereby we want to design projects and see how we will get the local sector to start preparing for what is going to be a big industrial uphill in Cameroon.

One would have expected that with all these projects coming up, the government should have had at least a project to create an iron and steel industry to process much of the iron. Is that very far or can we already start thinking that we may one day have an iron and steel industry in Cameroon?
Dr. Fuh Calistus Gentry: We have signed a memorandum of understanding with POSCO of Korea. The real terms of this memorandum of understanding is to lay down the framework for developing an iron and steel industry in Cameroon.
I also talked to you about the FECUNA project, which is going to see much about involving local people in how iron ore, 15% according to the new law, has to be transformed locally.
On that front, we are doing a lot and will continue working with other big iron and steel concerns in the world, to lay the foundation of this transformation.

One major problem which we are more likely to face is that some of these big companies might come, almost all of their staff, given that in Cameroon we don’t have the trained manpower in mineral exploitation. What has your ministry been doing in terms of training the people who can occupy good positions in the big companies that are coming?
Dr. Fuh Calistus Gentry: A mining school in the University of Ngaoundere has just gone operational. In the recent forum, we involved people from the science department in the University of Yaounde. We do encourage the universities in Cameroon to put the mining subjects strongly in their curricular.
But notwithstanding, the ministry is aware of this problem; reason why we had a very big chunk in the recruitment of 25.000.
We are overhauling our staff and training them so that those who are facing out will liaise with those who are coming new. Despite that there will always be need for some kind of expertise.
Our mining code and mining conventions also regulates the quota that must be allocated to local employees.

Cameroon possesses these diversed mineral resources in large quantity but it is just now that many people are hearing about minerals in Cameroon. What was the problem?
Dr. Fuh Calistus Gentry: Things as you have just seen round the forum; we have traveled round the world telling people: Cameroon is a very stable nation; that it has a very strong energy policy; with a sound mining code which gives a lot of incentives to investors. An agglomeration of these factors has influenced most people to take a risk with us. And in the mine industry, once people come and make noise, this is like ringing a bell for other people to follow.

Recently, we had some members of parliament (MPs) raising concerns about the award of exploration and exploitation permits in forest reserve. What are you doing about that?
Dr. Fuh Calistus Gentry: When you are awarded a mining exploration permit (license), it can cover 1000km2. A forest reserve might be inside or might interfere with the forest reserve. It doesn’t mean we mark out a forest reserve entirely. Even at the initial stage, it doesn’t pose much problems because exploration is an art. You don’t go digging and clearing the forest. You do small digging, clearing, small drilling; take samples, which in its initial stages do not per se have any impact in the forest.
The danger comes when you might find a big deposit, which may be sitting in this forest. At such a time, it is about priorities. If we have a deposit which is going to be the largest gold deposit in the world inside the forest reserve, it becomes an issue to be discussed as a national priority. But so far, we have not had such cases. I don’t think we really go out to give licenses in a forest area per se. Sometimes the forest areas are part of the licensed area.

Some months ago there was this controversy over the actual quantity of diamond reserves that we have in Cameroon. Can you give us a clearer idea on this?
Dr. Fuh Calistus Gentry: There is a rate at which we are set about exploration in Cameroon: companies do exploration and they tell us what they find. Even in iron ore, we are planning to develop a kind of investigative procedure, where, when there is drill core, the company would analyze half and it is expected that they would give us a quantity, where we can do random checks and verifications of what they find.
But the case of diamond is peculiar and particular because it has an erratic occurrence. Now, this particular company found diamond in two environments: alluvia (which is surface) and conglomerate (which projects down to even depths of 500m and above).
They did an evaluation and in giving them the mining license, we made it very clear that they have to initially start mining in the surface part and had an obligation to spend at least 2.5 million dollars to concretize the reserves in the conglomerate part.
They are moving well with their project. To say exact, we have given them time to make exact the figures. But they gave us a production schedule for over 25 years.
Our concern now is to see that their production schedule is respected. The license however made it very clear that they had to over a given period of time, come out with a clearer definition of the size of this deposit.

The mining industries are already coming in their great numbers. What guideline has government put in place to make sure that the surrounding population actually benefits enormously from what would be carried out?
Dr. Fuh Calistus Gentry: You can look at it from what the law says. There are royalties which are negotiated in the mining convention and regulated by the mining code, which have to do directly with the area, where this deposit or mining activities are taking place.
On the other hand, the mining process is huge. If we say there is going to be a railway line of 500km, which is going to, in the final run, handle deposits from Congo, Gabon, in fact, the impact is huge: it is beyond our imagination. It takes $2 billion to build the railway. Just the earthwork alone is over 700 billion FCFA. So these are industries with a very huge impact; that touch people in terms of jobs. Even the net effects of their activity cannot go unnoticed.
We have a Ministry of Environment which is a watchdog to see that the activities are done within the tenets of preserving our environment. If a mineral activity is not justifiable, that its impact economically is not that which is worth disturbing the lives of people, we don’t go ahead with it; reason why sometimes, we talk of an environmental impact. This liaises with what the economic impact of this deposit would have on the people. So when one outweighs the other, certainly we find that it would better the lives of the people in that immediate environment and most important, the live of everybody in this nation.

You talked about minerals including diamond. Now, for Cameroon to sell diamond on the international market, she needs to be part of the ‘Kimberly Process’. Where are we, in terms of this process?
Dr. Fuh Calistus Gentry: We have gone through the process: we have attended the initial meetings in Kinshasa. This ministry headed a mission to Washington. Here our files for adhesion to the Kimberly process will be completed. If not, certainly sometimes this year, we should finally be in the Kimberly process.

We know how much the oil sector pumps into the state budget of Cameroon. Is it possible to know what contribution the mining sector would also pump into this national budget?
Dr. Fuh Calistus Gentry: We are sizing up what we have; signing conventions to develop. Conventions mean asking and negotiating what taxes and royalties would be paid. This is a stage of evaluation.
We have a whole set of rules, which I will refer you to our mining code, which states what corporate tax every company would pay; what kind of concessions you give as a tax holiday; companies invest huge amounts of money. If you were to invest $5 billion to get something going, you can imagine. Most of the moneys are invested during exploration. Given a period, if you don’t pay, that money is deducted from your taxation scheme.
So these are a whole range of things that are negotiated during a mining convention. In the Mbalam convention that was finalized, there are guiding principles in terms of taxation. Unless a convention is completed, we cannot say exactly because we have to evaluate the amount of money the company put in exploration; deduct part of this expensive, so that it has a kind of tax holiday period in which to recuperate economically.

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