Tanzania seeks to reform mining sector for citizens' benefit

Saturday July 01 2017

A tanzanite miner. New Tanzania Bills seek to reform the mining sector. PHOTO | FILE

By The EastAfrican

The Tanzanian government has crafted new Bills as it seeks sweeping changes in the exploitation of natural resources in the country’s mining sector.

Two of the Bills are new while a third amends existing legislation as the Magufuli administration moves to ensure that Tanzania’s natural resources are exploited to benefit the citizens.

The proposed laws have come at a time when the government is negotiating with mining firms on revenue sharing.

The three laws are the Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Bill, 2017; the Natural Wealth and Resources (Permanent Sovereignty) Bill, 2017; and the Written Laws (Miscellaneous Amendments) Bill, 2017.

The Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Bill 2017 is meant to empower Parliament to review all the arrangements and agreements made by the government regarding natural resources.

Acacia Mining Plc, which has been in negotiations with the government after an audit of its activities and revenues which stated it had under-declared $100 billion since 1998, said it will review the proposed changes in the context of “our existing agreements and will provide further updates as appropriate.”


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The Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Bill, 2017 gives powers to parliament to direct the Government to re-negotiate and rectify any term that it seen to bear questionable circumstances in the contracts.

The Natural Wealth and Resources (Permanent Sovereignty) Bill, 2017 states that the People of the United Republic shall have permanent sovereignty over all natural wealth and resources and that the ownership and control (over natural wealth and resources) shall be exercised by, and through the Government on behalf of the People.

“Pursuant to paragraphs (c) and (i) of Article 9 of the Constitution, it shall be unlawful to make any arrangement or agreement for the extraction, exploitation or acquisition and use of natural wealth and resources except where the interests of the People and the United Republic are fully secured and approved by the National Assembly,” the draft law reads. 

According to the Natural Wealth and Resources (Permanent Sovereignty) Bill 2017, it will be the government’s duty to ensure that the country obtains an equitable stake in any arrangement towards extraction, exploitation or acquisition and use of natural wealth and resources.

Value addition

The proposed law bars exportation of raw resources and instead encourages establishment of valued addition facilities within Tanzania.

A number of laws dealing with natural resources, will also be amended to align with the new laws.  

The government maintains that the amendments to the existing legislations governing natural resources are seeking to remove inconsistencies between tax laws and the laws on mining and petroleum sectors which have resulted in the loss of revenues.

READ: Is Tanzania getting a raw deal for its mineral wealth?

Worried investors

But concern is mounting in the private sector that the unprecedented legislation together with growing resource nationalisation calls are likely to push away new and existing investors, with experts predicting that the government may lose up to 40 per cent of revenues if mining companies leave.

The Bills are expected to set the stage for the amendment of the Mining Act 2010, the Income Tax Act, the Insurance Act and the tax administration with the ruling Chama cha Mapinduzi-dominated parliament expected to overwhelmingly support them.

While investors are trying to understand how the laws will affect their investments and weighing their options, critics say the tabling of the drafts under a Certificate of Urgency locks out feedback from key stakeholders.

Withdrawing from conventions

A parliament schedule seen by The EastAfrican stipulates that stakeholders provide their feedback on Saturday while the parliamentary committees review government proposals between Sunday and Monday before MPs debate and vote for the Bills on Tuesday.

The amendments to the Mining Act of 2010 establishes the mining commission whose responsibilities include regulating the mining sector and resolve the disputes rising out of the mining operations.

Tanzania is a signatory to the Multilateral Investment Guarantee Agency and the International Centre for Settlement of Investment Disputes conventions where most of foreign investors have traditionally taken contractual disputes and it is most likely that the proposed commission will take over the role, rising the possibility of the country withdrawing from the conventions.

Furthermore, the government proposes amendments of section 9 of the Mining Act 2010 proposing the government to acquire up to 50 per cent of the shares of the mining company commensurate with the total tax expenditures incurred by the government in favour of the mining company.

“The National Gold and Gemstone Reserve will be under the Bank of Tanzania which will act as a government warehouse and the central custodian of all metallic minerals and gemstones obtained by the mineral rights holder in Tanzania,” the proposed amendment reads.

Reported by Erick Kabendera and Samuel Kamndaya.