Australian mining company OreCorp has announced plans to review its operations in Tanzania, which is reviewing its mining laws to enable the government to renegotiate mining contracts.
Other mining companies have also said they are reviewing the implications of the proposed law changes, which have drawn criticism for their potential to stifle investment.
Acacia announced that it had served a notification for international arbitration shortly after the Bills were passed ahead of the negotiations between the company and the government over tax evasion allegations.
Acacia’s decision came even after President John Magufuli warned that companies seeking international arbitration would be banned from operating in the country.
OreCorp said the new law could potentially impact its $287 million Nyanzaga gold project, which is projected to produce about 213,000 ounces of gold per year over a 12-year mine life.
According to Creamer Media, South Africa’s mining news weekly, trading of the shares of Australian Securities Exchange (ASX) -listed exploration company Kibaran Resources was suspended as the company considered the implication of the proposed law.
Kibaran’s Epanko graphite project is expected to cost some $89 million to construct, and could produce some 60,000 tonnes of graphite per year.
Graphite developer Walkabout Resources said it would continue engaging with Dar on the issue while monitoring the situation.
Walkabout is currently constructing Lindi Jumbo graphite project in southeast Tanzania that will produce 40,000 tonnes of graphite per year for over 20 years.
According to Reuters, Black Rock Mining Ltd has received legal advice confirming that it is too early to ascertain the full impact on the company’s Mahenge graphite project while Graphex Mining Ltd said a number of new provisions of proposed legislation are not expected to impact the company.
Shanta Gold Ltd is seeking advice while assessing its potential impact. On its part, Volt Resources Ltd said it would continue with its plans for Namangale project.
Strandline Resources Ltd believes the legislation will not have major impact on its plans to achieve exploration and project development goals.
While rejecting international arbitration, the proposed legislation provides that renegotiation of mining contracts be completed within three months or the specific section of the contract be cancelled.
Turbulent economic time
Tanzania said it is bracing itself for turbulent economic times after parliament passed the Bills.
The amendments will affect six laws: The Mining Act, Cap.123; the Petroleum Act, Cap. 392, Income Tax Act, Cap 148; the Insurance Act, Cap 394 and the Tax Administration Act, Cap 438.
Recently, parliament passed the Natural Wealth and Resources Contract (Review and Re-negotiations of Unconscionable Terms) Bill, 2017 and the Natural Wealth and Resources (Permanent Sovereignty) Bill 2017, which states that all natural resources belong to Tanzanians.
The Natural Wealth and Resources (Permanent Sovereignty Act 2017 further states that all disputes relating to extraction, exploitation or acquisition and use of natural resources shall be adjudicated by judicial bodies or other organs established in and accordance with laws of Tanzania.