On 23 April 2010 Tanzania's Parliament passed The Mining Act
2010 (the Act). The Act is a composite of a document presented to
Parliament (the Initial Reading), together with a
schedule of amendments (the Amendments). The Act
has yet to be Gazetted and thus is not yet in force, though it is
reputed to be under a "Certificate of Urgency" and
therefore is expected to come into force shortly.
The intention of the Government of Tanzania (the GOT) is to
within the Act address challenges that the GOT has identified in
relation to the mining sector in Tanzania; specifically, low
integration with other sectors of the economy, low contribution to
the Gross Domestic Product compared to the sector growth and low
capacity of the GOT to effectively regulate and administer the
The Act is more restrictive than its predecessor and is
consistent with other recent legislation which seeks to concentrate
a greater interest in the hands of Tanzanian nationals with
increased regulation in key sectors whilst continuing to encourage
inward investment. Some of the publicly expressed concerns were due
to the restrictions contained in the Initial Reading (such as
reservation of mineral rights and licenses for dealing in minerals
being reserved to Tanzanian citizens and corporate bodies under the
exclusive control of Tanzanian citizens) which were subsequently
relaxed by the provisions of the Amendments. However, the Act does
materially increase the levels of royalty payable to the GOT and
places restrictions on non-Tanzanian participation in small scale
mining, dealing in minerals and gemstone operations.
There are concerns within the industry that the restrictions
will have a negative impact on the Tanzanian mining industry both
in terms of its competitiveness and as a magnet for foreign
We have yet to see an official copy of the Act, so our comments
are subject to sight of this.
The Act will introduce significant changes to mining policy, in
particular the following.
(a) Mineral rights and licenses for dealing in minerals will be
reserved exclusively to Tanzanian citizens and corporate bodies
under the exclusive control of Tanzanian citizens. It has been said
that agreements/licences currently in force with non Tanzanian
controlled mining companies remain unchanged but there is no clear
"grandfathering" provision on this. The main point to
note, however, is that the Amendments significantly mitigated the
Tanzanian control issue in respect of general mining licences, and
the restrictions will apply only to "primary mining
licences", which are licences with respect to small scale
mining operations involving capex of less than US $100,000.
(Section 8 and Section 73)
(b) Licences to mine for gemstones are only to be granted to
Tanzanians, regardless of the size of the operation, except where
the Minister determines that the development is most likely to
require specialised skills, technology or a high level of
investment in which case the licence may be granted to an applicant
so long as the non- Tanzanian participation element is no more than
50% (Section 8(4)).
(c) The Act gives the Minister power to prescribe a standard
model form Mining Development Agreement for all projects exceeding
US $100m. So far as we are aware no standard form has yet been
prescribed. (Section 8(4))
(d) The Act gives the Minister power to make regulations
authorising the GOT to participate in the conduct and financing of
mining operations and give the GOT a free carried interest, the
level of which is not set by statute but rather by negotiation
between the GOT and the relevant mineral rights holder (Section
(e) It amends the method by which GOT royalties are calculated
so that they will in future be levied on the gross value of
minerals, rather than the present method of calculation which
refers to the net value (Section 87).
(f) It increases the rates of royalties levied by the GOT on the
gross value of minerals as follows:
(i) uranium – 5%
(ii) gemstone and diamond – 5%
(iii) metallic minerals (copper, gold, silver, and platinum group)
(iv) gem – 1%
(v) in the case of other minerals, including building materials,
salt, all minerals within the industrial
minerals group – 3%.
(g) Although some writers have asserted that the Act imposes an
obligation for mining companies to list on the Dar es Salaam Stock
Exchange, whilst the Act does refer to the Minister having the
right to make regulations relating to a public offering, provisions
for doing so are not contained within the Act itself. (Section
(h) The Act requires a greater degree of disclosure by the
holders of mineral rights in respect of reports, records and
general information. (Section 100 and Second Schedule)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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