SEVERAL major
decisions made by President John Magufuli, as his administration
finishes five years in power, have brought about positive impacts not
only on the mining sector, but also on the
protection of the country's
natural resources in general.
One of such
milestone decisions initiated by President Magufuli's administration is
the coming of the Mining (Local Content), Regulations, 2018 included in
the Written Laws (Miscellaneous Amendments), Act No 7 of 2017, following
the amendments of the Mining Act, 2010.
Section 10(1) of
the Act, as revised in 2018, states that in any mining operations under a
mining licence or special mining licence, the government shall have not
less than 16 per cent non-dilutable free carried interest shares in the
capital of a mining company, depending on the type of minerals and
level of investment.
Subsection (2)
states: "In addition to the free carried interest shares, the government
shall be entitled to acquire, in total, up to 50 percent of the shares
of the mining company commensurate with the total tax expenditures
incurred by the government in favour of the mining company."
Whereas Subsection
(3) stipulates that acquisition by the government of shares in the
company shall be determined by the total value of the tax expenditure
enjoyed by the mining company.
President Magufuli
was sworn in as President of the United Republic of Tanzania on November
5, 2015, after he emerged the winner of the general election on October
25, 2015.
He scooped 8,882,935 votes (equivalent to 58.46 percent) of the total votes. He was declared the winner under the ruling CCM.
After his
nomination on July 21, 2015, as the CCM presidential candidate for the
2015 general election, one of his priorities he marketed during the
presidential campaign was the mineral sector.
He promised to take actions to further promote the mining sector and increase its contribution to the GDP.
According to the
CCM 2015/20 electoral manifesto, the ruling party directs the government
to take further decisions, notably combining and managing a system for
overseeing mining operations, collecting data and monitoring mining
revenue for raising government revenue.
Other issues
related to the establishment and implementation of effective strategies
to attract investment capital in the mining sector, particularly rare
earth elements (REE) and encourage industrial production and marketing.
The government has
also put in place significant infrastructure such as electricity,
telecommunications networks, water, roads through the public-private
partnership (PPP) in areas likely to establish new major mines and
improve censing and a management system for mining licences.
Other areas to be
worked on include strengthening the National Mining Corporation
(Stamico), to be fully involved in the exploration, extraction and
service activities in the mining sector on behalf of the government and
all Tanzanians.
Furthermore, to
continue building the capacity of the Geological Agency of Tanzania to
achieve the highest levels of data collection and geological information
that will accelerate the exploration and acquisition of mineral
resources in the country.
Besides this to
continue building the Tanzania Minerals Review Agency's capacity and the
Regional Mining Offices to strengthen themselves in monitoring and
regulating the production and trade in mining activities in the country,
thus increasing the profitability of the mining sector in the economy.
Another action
related to managing and encouraging investment in mining activities to
boost the sector's contribution to GDP is to develop and implement
specific strategies that will reduce or eliminate mining exports and
illegal mining activities in the country.
Other issues
include developing and implementing specific strategies that will enable
the Tanzanite market in the country to be more resilient and thus
maximize the benefits derived from those minerals found in Tanzania
alone and enable small-scale miners to self-invest through the mineral
sector.
After taking the
country's highest office, President Magufuli's administration initiated
the amendments of the Mining Act, 2010, followed by the introductions of
the Mining (Local Content) Regulations, 2018.
These Regulations were enacted following the Amendments of the Mining Act, 2010.
These Regulations
have to be followed by contractors to ensure local content rules are
adhered to all persons or companies involved in the mining sector.
Following the
amendments of the Mining Act, a committee has been established to
oversee the implementation of the Regulations in the mining sector in
Tanzania.
These Regulations
clearly state that priority has to be given to qualified Tanzanians in
employment and in job training, among other things.
Furthermore, the
Regulations provide that preference has to be given to local service
providers and goods which are manufactured locally.
Companies which will be given priority in the grant of mining licences are indigenous Tanzanian companies.
According to the
Regulations, legal services have to be provided only by local legal
practitioners or local law firms, while insurance and financial services
used by these companies should be local ones only.
The Mining (Local
Content) Regulations, 2018 also provides that Tanzanian companies which
are indigenous must hold an equity participation of at least 20 percent
in mandatory joint venture arrangements for the supply of goods and
services which will be required.
It is stated
further that the indigenous Tanzanian companies are required to have at
least 5 percent equity participation in a mining company.
Failure to comply
with the Regulations attracts heavy criminal and administrative
sanctions, notably fines up to $5m (over 10bn/-).
When dissolving the
11th sitting of Parliament in Dodoma on June 16, 2020, President
Magufuli highlighted several achievements and major revolutions attained
in the mining sector, notably the establishment of Ministry of Minerals
and the control of export and transportation of raw minerals outside
the country.
Another reform
includes the introduction of mining markets in each region and increase
the participation of small-scale miners in the mining sector.
More importantly,
the Head of State recalled that in July 2017, the National Assembly
passed the Natural Wealth and Resources (Permanent Sovereignty) Act,
2017.
The Act has for the first time enabled Tanzanians to own their resources through legal powers.
The Act also
resulted in the establishment of Twiga Minerals Company, which the
government of the United Republic of Tanzania owns 16 percent and
Barrick Company 84 percent of the shares and provision of $100m
compensation paid by Barrick out of $300m the company agreed to pay.
President
Magufuli's responses to grievances in the protection of the country's
natural resources also saw the construction of a 25km wall in Mirerani
Mine, a project which the government implemented, thanks to the proposal
by the Parliamentary Special Committee formed to probe into Tanzanite
mineral losses.
As a result of such
various steps, President Magufuli is on record as the mining sector in
2019 grew by 17.7 per cent, followed by the construction sector which
grew by 14.1 per cent.
In addition, he said revenue from the mining sector had also increased.
For example, in the 2018/19 fiscal year 346bn/-was collected from 194bn/-in 2016/17.
In 2019/20, about 470bn/-will be collected, whereas as of April 2020 alone, 58bn/-was collected.
Other achievements
attained in the mining sector are the issuance of 221 mining licences,
four mining licences (smelting), and other four mining licences
(refining).
In addition,
President Magufuri said his government had allocated 38,567 hectares to
small-scale miners and trained 10,338 small-scale miners.
Several things that
we have to be proud of that have been implemented by the fifth phase
government under President Magufuli of which various leaders, include
what Prime Minister Kassim Majaliwa, revealed in many places through
public meetings, the media and various documents.
In his concluding
address in Parliament in Dodoma, Mr Majaliwa pointed out that amendments
to the Mining Act was done parallel to the establishment of 28 markets
and 12 centres in the mining area, thus increasing revenue collection,
reducing illegal trade and exporting minerals.
The PM is also on
record by disclosing that from March to September, 2019 at least
4,680.28km worth 432.49bn/- was generated with the government collecting
30.27bn/-.
During Minister for
Finance and Planning, Dr Philip Mpango's presentation of the 2020/21
general budget, he pointed out that the amendments to the law had
facilitated negotiations between the government and all major mining
companies with the aim of acquiring 16 per cent of state shares.
In addition, the
minister said the government had successfully established 28 markets and
25 mining centres in the country, as well as completion of the
construction of four centres in Bukoba, Handeni, Bariadi, and Musoma and
two exemplary gold refineries of Lwamgasa and Katente.
He also mentioned
the completion of the construction of the one-stop centre in Mirerani,
he said, as well as the improvement of mining control and the completion
of the construction of a 25km wall around Tanzanite Mine at Mirerani.
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