Regional leasing firm, Vehicle and Equipment Leasing Limited (VAELL), has secured a Gold mining tender and will start the supply of mining equipment to the second largest mine in Tanzania.
In the agreement, VAELL will be supplying Star Planet Consultancy (T) Limited (STAPCO). So far, machinery worth $20 million (Sh2.2 billion) have been ordered and about $10 million (Sh1.1 billion) has already been delivered. STAPCO is presently mining gold in the Stateowned Biharamulo mine, Kagera Region. Tanzania is the fourth-largest gold producer in the continent after South Africa, Ghana and Mali. The mining industry in Tanzania experienced an approximate 15.3 per cent growth in Q1 of 2020 compared to 10 per cent growth in Q1 of 2019.
The tender is scheduled to run for a period of five years. Some of the equipment leased to the miner include articulated dumpers, excavators, loaders, breakers, tippers, wheel graders, drills and compressors.
Bertha Mvati, VAELL’s Managing Director, said that amidst their operations in East Africa, they came to the realization that locals have the capacity to perform and thus needed all the support they could get. According to her, the firm aimed to support more government initiatives, particularly in the gold mining sector.
“We have collaborated with Tanzanians to develop the capacity as we create more job opportunities for the locals. We believe local content has become of age and we need to empower them so as to uplift the standards of living.” Most Small Medium Enterprises (SMEs) currently prefer to lease owing to the flexibility of leases. In keeping with its focus on flexibility, SMEs are keen to adopt lease solutions to ease their operations.
Leasing increases total capital investment in an economy. Leasing is a complementary form of financing that serves as an alternative to traditional bank lending and increases the ability of companies to source different types of financing for capital investment. “Businesses and governments prefer leasing model which enables them to concentrate on their core business, cut business operational costs and increase efficiency in their day-to-day operations,” said Bertha.
With this transaction, the group turnover is anticipated to increase from Sh950 million to approximately Sh1.3 billion which will, in turn, translate to a 40 per cent growth in the revenue.
“Our gross profit and net profit will grow by 25 per cent annually boosting the internal cash flows, creating Investments Avenue which will, in turn, provide employment within the East Africa Region.” Bertha concluded.