Tanzania has ruled out the construction of a copper smelter the Bulyankulu Gold Mine citing high costs.

According to the findings of the Tanzania Gold Audit Programme, the smelter — to smelt and refine copper concentrate produced from the Bulyankulu Gold Mine — would cost a whopping $500 million-$800 million to construct; would need between 60 per cent 90 per cent of copper concentrate imports (not less than 150,000 tonnes) to feed the smelter and the country would have to develop new mines to sustain its operations.

Besides, the smelter would also need a sulphuric acid plant for purification of fugitive gases.

The smelter at Zambia Mopani Copper Mines, built in 2006, cost $850 million.

the audit also found that construction of a smelter was not viable due to unavailability of copper sulphide deposits in the country, which would add to the copper concentrate requirements to feed the smelter.

“If a copper smelter was to be built and ended up relying on imported copper concentrate to meet minimum annual operations requirements, it would be hard for its products to compete in the world market on pric,” says the audit report.

Paul Masanja, head of unit of the Gold Audit Programme of the Ministry of Energy and Minerals told The EastAfrican that the country cannot afford the kind of investment needed.

Mr Masanja said that cost and availability of reliable electricity supply was also a key deterrent considering that electricity was expensive and the existing capacity does not meet the requirements to run a large copper smelter.

“Most planned new copper concentrate smelters in the world are in non-free market economies and are heavily supported by local governments directly through tariffs,” he said.

The audit, which was conducted last year, said the government needs to thoroughly study the transactions of copper concentrate exported by the mine to China and Japan to ensure the state reaps maximum benefits from exported minerals.

Mr Masanja said the government mandated the Gold Audit Programme to conduct the study in order to determining the viability of a copper smelter in Tanzania to serve the Bulyanhulu Gold Mine and other mines in the future.

The Bulyanhulu Gold Mine is owned by Barrick Gold Corporation and produces and exports between 25,000 and 50,000 tonnes of copper concentrate annually for smelting and refining to recover gold, silver and copper.

The Gold Audit Programme said that most of the copper concentrate producers in the world, running similar operations to those of the Bulyanhulu Gold Mines, do not have their own smelters, but export their concentrates to Marc Rich Investment in China or Sumitomo Metal Mining Co Ltd in Japan for smelting and refining.

The audit was conducted to put to rest arguments that Tanzania was losing by exporting raw minerals to China and Japan for processing instead of adding value at home.

According to the study, the copper concentrate exported to China is made up of copper, 14 per cent; gold, 0.02 per cent; and silver, 0.015 per cent.

The Ministry of Energy and Minerals said that there are about 400 copper mines, 150 copper smelters and 170 copper refineries worldwide.

Most copper concentrate producers export their products to China or Japan for treatment and refining.

The main copper concentrate producers are Chile, Canada, Australia and Argentina. Chile supplies more than 29 per cent of China’s copper concentrate imports.

The Bulyanhulu Gold Mines has a long term smelting contract with Pan Pacific Copper Co. Ltd, an affiliate of Nippon Mining and Metals Co. Ltd, and with Sumitomo Metal Mining Co. Ltd, which will smelt about 30-70 per cent of the mine’s concentrate this year.