MINING. Accounting for approximately 17 percent of GDP (est. 1996), industry plays a small, albeit important role in the Tanzanian economy. As a subdivision of industry, the mining sector alone constitutes about 5 percent of GDP. At the same time, however, both industry in general and mining in particular engage a relatively small percentage of the labor force. Indeed, the industrial sector combined with the commercial sector provides employment for only 20 percent of the labor force.
The country is endowed with a wide variety of mineral deposits, including gold, diamonds, salt, gypsum, gemstones, iron ore, natural gas, phosphates, coal, nickel, and cobalt. Many of these minerals are exported to other countries, and mining, excluding petroleum products, accounted for 7.3 percent of export earnings in 1996. In the same year, petroleum products comprised 2.1 percent of export earnings.
As in the case of agricultural produce, however, mining output and output of refined minerals seems to oscillate considerably from year to year. In 1989, for example, 617,000 tons of petroleum products were produced, whereas in 1992, 3 years later, this figure plummeted to 55,900 tons. Similarly, 3,200 tons of aluminum were produced in 1993, while this figure dropped to 1,100 in 1995. According to the U.S. State Department, some of the impediments that prevent effective exploitation of mineral resources include a lack of capital, poor infrastructure, bureaucratic inefficiency, and limited technology.
Under the auspices of the IMF and World Bank sponsored SAPs, Tanzania has enthusiastically promoted foreign direct investment in the mining sector, effectively reversing its strong regulatory policies. Though few foreign mining firms are actually in operation, many multinational corporations (MNCs) (firms that operate in several countries) are beginning to look upon prospects in Tanzania favorably. Recently, there have been several developments with a Canadian company, Tanganyika Oil, which owns 75 percent of an oil concession in Mandawa, 250 kilometers (155 miles) south of Dar es Salaam.
Some critics, such as Chachage Seithy L. Chachage, author of the essay "New Forms of Accumulating in Tanzania: The Case of Gold Mining," which appeared in Mining and Structural Adjustment: Studies on Zimbabwe and Tanzania, severely criticize Tanzania's new policy of openness. Chachage argues that the government is on the path of creating an "economy of plunder," in which the benefits of the country's rich minerals will accrue to foreigners rather than Tanzanians. At the same time, the government is in an extremely difficult position, as it lacks the resources to exploit the mineral reserves itself. This incapacity is largely related to the limited money the government has to invest in economic projects because of the large burden imposed by debt servicing .