Tanzania to issue mining licences through cabinet approval

A miner inside the Bulyanhulu gold mine in northern Tanzania. The country will issue mining licences through cabinet approval. PHOTO | FILE 

In Summary

• The country previously issued licences for large-scale projects through its mining ministry.
• Tanzania is seeking a bigger return from its vast mineral resources by overhauling the fiscal and regulatory regime of its mining sector.
• President John Magufuli has approved a series of actions since election in late 2015 that sent shockwaves through the Tanzanian mining industry.

By REUTERS
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Tanzania will issue large-scale mining licences only after cabinet approval, a senior official said on Friday, part of new measures aimed at further tightening control of the industry.

The country previously issued licences for large-scale projects through its mining ministry, but then delegated powers to a newly-appointed mining commission under new regulations passed in January.

Tanzania, Africa’s fourth-largest gold producer, is seeking a bigger return from its vast mineral resources by overhauling the fiscal and regulatory regime of its mining sector.

“The whole government, through the cabinet, will now be involved in approving licences for large-scale mining companies to make sure that national interests are safeguarded,” Minister of Justice and Constitutional Affairs Palamagamba Kabudi told members of parliament.

“For far too long, our mining laws have presided over the exploitation of our natural resource wealth instead of overseeing investments for the benefit of the nation,” Kabudi added.

The government overhauled the fiscal and regulatory regime of its mining sector last year, unnerving some foreign investors.

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Stable tax regime

On Friday, Tanzania also announced that it would no longer sign new mineral development agreements (MDAs), which guarantee a stable tax regime for existing mining companies.

Foreign-owned mining companies that currently have MDAs in place in Tanzania include three gold-producing mines owned by London-listed Acacia Mining Plc and one gold mine owned by Anglogold Ashanti.

President John Magufuli has approved a series of actions since election in late 2015 that sent shockwaves through the Tanzanian mining industry.

In July last year, he suspended the issuance of all new mining licences until the new mining regulatory regime was in place.

The government has also imposed a ban on exports of gold and copper concentrates.

Barrick Gold Corp., majority shareholder of Acacia Mining, is currently at loggerheads with the government after Acacia was banned from exporting gold and copper concentrates, having been accused of tax evasion.

Acacia, which denies the allegations, has said it was seeking international arbitration for its investment dispute. It has since launched talks with the government.

At Friday’s parliamentary session, Mining Minister Angellah Kairuki said the government’s ban on exports of gold and copper concentrates would remain in force until mineral smelters were built in the East African nation.

“So far, 27 companies have already expressed interest to build mineral sand smelters in the country,” she said.

Kairuki said the ban on exports of mineral sand was aimed at boosting government revenue collection by adding value to the minerals in Tanzania.