Coal mining activities continue. Red tape remains a major hurdle when it comes to fully exploiting the extractive industry in Tanzania. Stakeholders are now calling for reforms. PHOTO | FILE
Dar es Salaam. The government has said a major challenge facing the $3-billion Liganga and Mchuchuma iron project was reaching into agreement over a number of issues including incentives.
The project is being implemented by the Tanzania China International Mineral Resource Ltd (TCIMRL) which has taken over nine years to kick off.
Investment, Industry and Trade deputy minister Exaud Kigahe told The Citizen that President Samia Suluhu Hassan declared interests of developing all projects including those in the mineral sector.
However, he noted that reaching into agreement on various issues related to Liganga and Mchuchuma remained a challenge.
Mr Kigahe said the Head of State had appointed Prof Palamagamba Kabudi to oversee the progress of negotiations in order to ensure there was a win-win situation. “The government has picked the negotiation team that has been meeting with the investor for rounds of discussions and agree on pending issues including those related to incentives,” he said.
According to him, expectations were that consensus will be reached after negotiations have been finalised and realisation of the win-win situation has been made.
In January 2020, reports made it that the government was reviewing contracts for the projects and align them with the reviewed natural wealth and resource laws.
The responsible ministry said all strategic projects in the extractive sector including those in the mining as well as oil and gas sectors were being reviewed. But, when contacted, a TCIMRL officer, who asked not to be named because he is not the spokesperson, said the challenge was that negotiations between the two parties stopped since June, 2021 and nothing was happening on the ground.
“The company has invested a lot in the project, but nothing can be done but wait for decisions. However, people are dragging their feet,” he said.
November 2018, the Chinese firm claimed that the Treasury was slow in approving incentives negotiated with the government back in 2015.
In 2020, the company won the tender for the mega project with the potential to creating 5,000 direct employment and 30,000 indirect jobs, however the roll-out has been beset by red tape to date.
Earlier, the company sought for a 10-year tax relief in order to implement the project whose lifespan ranges between 50 and 100 years.
It sought tax incentives on import duty for imported cargo for the construction equipment, spare parts and tax relief on fuel imports.
The Chinese firm’s parent company, Sichuan Hongda (Group) Limited (SHG) carried out geological exploration, environmental and social impact assessment study.
It also made valuation for the purpose of compensating people affected by the project and researched development of smelting technology to a tune of $70 million.
“The capitalised exploration cost consumed a lot of resources because of the complexity of mineralogical constitution when it comes to separation of titanium from iron ore and design for industrial complex for power generation for iron and steel industry,” said TCIMRL. Immediately after the licence had been granted, TCIMRL started negotiations with the government in 2014 through the National Investment Steering Committee (NISC) on granting investment incentives for Liganga and Mchuchuma projects as provided by the Tanzania Investment Act (Cap. 38).
“After concerted negotiations, the Performance Contract was signed in June 2014, which provided for some investment incentives for the project.”
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