Tanzania: Tanzania Overhauls Mining Laws, Fines Investor US$190 Billion: Is Your Investment Protected?

The Situation: Hoping to increase the nation's revenue from natural resources, the Tanzanian government is introducing a number of increasingly drastic reforms to the mining industry.

The Result: The new laws heighten the government's role and power in investment contracts, increase the costs of foreign investment, and substantially reduce investment protections, including international arbitration.

Looking Ahead: Investors should take immediate action to mitigate the risks associated with the Tanzanian government's actions pertaining to the mining industry.

Recently, Tanzania enacted a series of mining laws that significantly erode protection for existing and future investments in the mining industry. As part of these measures, one foreign investor has been assessed a US$190 billion penalty. It is important for investors to obtain immediate legal advice to address and mitigate the risks associated with the Tanzanian government's changes to the mining industry. Any foreign investor that has already invested in Tanzania or is considering an investment in Tanzania should urgently evaluate its status and determine the available legal options, including international arbitration.

These legislative changes may, unfortunately, slow economic growth in Tanzania, which had been steadily growing despite diminishing growth in Sub-Saharan Africa generally. This high level of growth has made the region a magnet for foreign investment, particularly with respect to investment in agriculture, mining, tourism, telecommunications, financial services, energy, and transportation infrastructure. However, investors in the region face relatively high political risk, and every investor is well advised to evaluate potential political, legal, and economic risk in a holistic manner.

Tanzania's New Mining Laws

Tanzanian President John Magufuli is spearheading efforts to overhaul the mining industry to increase state revenue from natural resources. This has led to a series of increasingly drastic reforms. First, in March 2017, Tanzania banned the export of unprocessed ores. Next, effective July 1, 2017, Tanzania enacted the Finance Act, which imposes a one percent clearing fee on all minerals exported from Tanzania. The largest changes came a few days later, when President Magufuli signed three bills into law that dramatically change the landscape for current and future natural resources investments in the country.

Among other things, the new laws require the government to own at least a 16 percent stake in mining projects, increase royalty taxes on gold and other minerals, provide the government with the right to dissolve or renegotiate contracts for natural resources, and reject international arbitration for natural resource disputes. Compounding the problem, President Magufuli has suspended the issuance of new mining licenses pending implementation of the laws and stated the government would review all existing mining licenses granted to foreign investors.

Effects of Mining Laws

These changes are of deep concern for companies with investments in Tanzania because the new laws heighten the government's role and power in investment contracts, increase the costs of foreign investment in Tanzania, and significantly reduce investment protections that investors have enjoyed, such as international arbitration.

The repercussions of these laws are already palpable. Since the issuance of the export ban in March 2017, Acacia Mining's share prices and revenue have dropped dramatically, and the company may have to close its primary mine in Tanzania unless the ban is lifted. In addition, Tanzania has also assessed US$190 billion in back taxes against Acacia and recently detained a senior Acacia employee in relation to the dispute. Although Acacia has attempted to resolve its dispute amicably, the company has filed a notice of arbitration against Tanzania to protect its investment. Tremont Investments has also terminated a US$42 million takeover of its joint venture partner's stake in a Tanzanian project. Other companies are considering their legal options regarding the negative effects these laws might have on their existing Tanzanian projects.

Protecting Your Investment

The Tanzanian mining laws have drastically changed the investment climate in the country, including removing the right to international arbitration in the future. As such, investors must evaluate available options to ensure access to international arbitration to protect their investments. Bilateral investment treaties ("BITs") signed between an investor's home state and Tanzania provide foreign investors the right to bring claims to protect their investments. These treaties provide substantive protections for foreign investors, like guarantees of fair and equitable treatment, national treatment, and protections against expropriation. BITs generally include a compulsory arbitration clause for the settlement of disputes that arise between the state and a foreign investor of another signatory state.

There are presently 11 BITs in force between Tanzania and other states—including Canada, Germany, the Netherlands, and the United Kingdom. As Tanzania is already a party to these BITs, the new legislation does not remove the right to international arbitration under the preexisting treaties.

For instance, existing investors may consider bringing an arbitral claim to preclude the Tanzanian government from renegotiating or dissolving an existing mining agreement, or bring an arbitration claim to recover damages after the Tanzanian government has renegotiated an agreement and increased taxes on the investment. Several major companies have already taken this approach and initiated international arbitration against Tanzania in light of the new laws. Given the likely significant impacts that the new mining laws will have on investments in Tanzania, every prudent investor should consider how international arbitration can protect existing investments against future state actions. Investors contemplating a role in investing in Tanzanian natural resources should consider ways to structure their investments to take advantage of existing BIT protections.

Two Key Takeaways

  1. Reforms to Tanzanian mining laws have dramatically altered the country's investment climate, including removing the right to international arbitration in the future.
  2. Investors considering opportunities in Tanzanian natural resources should contemplate structuring their investments to take advantage of existing bilateral investment treaty protections.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions