Four firms sign up to invest in Dar es Salaam’s mining

Workers at a gold mining site. PHOTO | FILE

By EMMANUEL ONYANGO

More by this Author

Tanzania seeks to increase mining revenue after it signed new agreements with four firms.

The four firms, Faru Graphite Corporation, Petra Diamonds Ltd (PDL), Nyati Mineral Sands Ltd and Sotta Mining Corporation, are now expected to invest in the mining

sector and execute major projects anticipated to further develop sector as the government eyes an annual injection of $ 1.2 billion in taxes and royalties. The signing of the new rights, witnessed by President Samia Suluhu at the Julius Nyerere International Convention Centre (JNICC) in Dar es Salaam, also saw the four firms issued with trading licences.

“Our commitment is to create a ground for a win-win situation. We want Tanzanians to benefit from the country’s natural resources that we are blessed by God,” President Suluhu said.

Tanzania Justice Minister Prof Palamagamba Kabudi said the new development was yet another step towards helping the country’s economy to grow further. The government also issued licences to Nyanzega Gold mine, Fungoni Heavy Mineral sands project in Kigamboni, Mahenge graphite project. It signed a new framework agreement with Petra Diamonds. President Suluhu said agreements were a tangible fruit of the review of minerals laws, which was implemented under President Dr John Magufuli. In 2017, parliament passed a series of legislations. For mining companies, the 2017 Mining Laws introduced a number of new conditions including a 16 percent free carried interest for the government and restrictions on the export of raw resources for beneficiation outside Tanzania.

“In all the companies except the PDL, the government enjoys 16 percent free-carried interest and has agreed on the issue of shares in the mine’s holding company Williamson Diamonds Ltd” Prof Kabudi said. The deal with the London-listed miner will increase the government’s interest to 37 percent from 25 percent. This means that Petra’s stake in the mine will reduce to 63 percent from 75 percent. In addition, the two partners have agreed to an economic benefit ratio of 55 percent for the government and 45 percent for Petra.

On the other hand, the government agreed with Faru Graphite Corporation an economic benefit ratio of 52 percent for the former and 48 percent for the latter.

Tanzania government has expressed confidence in attaining 10 per cent contribution from the mining sector to the Gross Domestic Product (GDP) come 2025, following positive trend recoded in the past six years.

Official data have it that the mining sector’s contribution to the GDP currently stands at 6.9 per cent to the GDP, up from 4.3 per cent that was recorded in 2014. This is an increase of 77 percent.

“The e government has issued 20,277 mining licenses to investors. This was driven by enactment of natural resources acts, political will as well as commitment among public officials and other stakeholders,” Mining minister Dr Doto Biteko told The EastAfrican.