Tanzania: Regulatory Changes In Tanzania's Mining Sector

Last Updated: 12 March 2019
Article by Peter Kasanda, Amalia Lui and Esther Kilimba

In February 2019 a series of changes were made to Tanzanian mining laws and regulations. These changes were as follows:

1. Changes to the Mining Act 2010

Parliament passed the Written Laws (Miscellaneous Amendments) (No.2) Bill of 2019 (the Mining Act Amendment Bill) on 9 February 2019 and we understand that it is currently awaiting the President's assent. When the Mining Act Amendment Bill receives this assent, a number of changes will be made to the provisions of the Mining Act 2010 (the Mining Act).

2. Changes to mining-related regulations

Tanzania's Minister of Minerals has the power to create regulations under different Acts of Parliament, such as under the Mining Act and the Tanzania Extractive Industries (Transparency and Accountability) Act 2015 (the TEITI Act). Pursuant to this power, the Minister has created the following new regulations under the Mining Act and the TEITI Act:

  • GN 135 of 2019 – Mining (Mererani Controlled Area) Regulations;
  • GN 136 of 2019 – Mining (Mineral Beneficiation) Regulations;
  • GN 137 of 2019 – Mining (Diamond Trading) Regulations;
  • GN 138 of 2019 – Mining (Minerals and Mineral Concentrates Trading) (Amendment) Regulations;
  • GN 139 of 2019 – Mining (Local Content) Regulations (the New Local Content Regulations); and
  • GN 141 of 2019 – Tanzania Extractive Industries (Transparency and Accountability) Regulations.

In this briefing, we outline the highlights of the Mining Act Amendment Bill. We will also briefly discuss the New Local Content Regulations.

Highlights of the Mining Act Amendment Bill

  • Additional requirement to obtain consent from the licensing authority
  • Restriction on import permit holders possessing and disposing of minerals and provision of minimum fines / an imprisonment term for contravention
  • Exceptions to the buying and selling of minerals at Mineral and Gem Houses
  • Requirement for broker licence applicants to specify the buying stations from which they intend to buy minerals
  • Requirement to obtain a mineral import permit in order to import minerals
  • Alteration to duration of mineral import permits and payment of prescribed fees
  • Introduction of specific conditions when importing diamonds
  • Mineral ores or tailings owned by small scale miners now to be a trading commodity in Tanzania

The table below compares the current provisions of the Mining Act against what is being proposed by the Mining Act Amendment Bill.

The Mining Act – as it currently stands

The Mining Act Amendment Bill – as is being proposed

Definitions

The Mining Act does not define the terms "mineral ore" or "tailings".
  • "Mineral ore" is defined to mean all naturally occurring material such as rocks / sediments from which economically valuable minerals can be obtained.
  • The term "tailings" is defined as material leftovers after a mineral ore has been crashed and valuable minerals extracted.

Transfer of mineral rights

The basic requirement for transfer of mineral rights was that the Mining Commission requires proof of there being substantial development before consenting to the assignment of a special mining licence / mining licence to another person.

In addition to the existing requirements for transfer of mining and special mining licences, the Mining Act Amendment Bill provides that the consent of the licensing authority shall not be granted unless the following has been submitted:

  • Provision of a tax clearance certificate from the TRA; and
  • Provision of proof that other charges, fees and payables have been cleared.

Procedure for disposing of minerals

  • Only mineral rights holders and licensed dealers / brokers can possess or dispose of minerals.
  • Employees, agents and contractors can only possess / dispose of minerals on behalf of mineral rights holders, licenced dealers or brokers.
  • Also, there are penalties imposed for breach of the restrictions on the possession and disposition of mineral rights.
  • The restrictions on possession and disposition of minerals which were imposed on mineral right holders, a licensed dealer or a licenced broker have now been extended to apply to import permit holders.
  • The penalties have been amended to provide a minimum cap. Prior to the amendment, the penalty provision provided that upon breach of this provision, a fine of not exceeding ten million shillings will be payable if the offence is committed by an individual and now it provides that, a fine of not less than five million shillings but not exceeding ten million shillings shall be payable. The imprisonment terms remain unchanged.  For corporate bodies, a minimum cap of a fine of not less than twenty million shillings has been introduced.

Establishment of Mineral and Gem Houses

  • The Mining Act merely provides that "Mineral and Gem Houses" shall be established throughout Tanzania.

The Mining Act Amendment Bill adds more colour as to what purpose and functions the Mineral and Gem Houses will serve, by introducing the following provisions:

  • The buying and selling of minerals will be conducted at Mineral and Gem Houses which have been established by the Mining Act.
  • Mining licence holders / special mining licence holders will be able to sell their minerals (extracted from licensed areas) at a market of their choice.
  • If Mineral and Gem Houses have not yet been established within a particular area, the Mining Commission will establish buying stations.
  • In order to be able to transact at these buying stations, a broker licence, issued by the Mining Commission, will be required.
  • The Minister of Minerals may publish a notice in the gazette to exempt certain miners from the above requirements.

Licensing requirements for "Broker Licences"

  • Broker licences authorise the holder of a licence to buy minerals from an authorised miner and sell the same to a licensed dealer.
  • Application for the grant of a broker licence requires the applicant to state their name and physical address, the mineral sought; attaching two recent passport size photographs. Additionally, the applicant must qualify to be granted a primary mining licence.
  • In addition to the existing broker licensing requirements under the Mining Act, an applicant will be required to inform the Mining Commission of the buying stations from which the applicant is looking to trade in minerals.

Licensing requirements for "Mineral Import Permits"

  • The Mining Act does not currently have any provisions relating to "minerals import permits" nor their conditions. 
  • Provides for mineral import permits to be issued by the Mining Commission either prior to entering Tanzania or at a port of entry.
  • Mineral import permits will be issued upon payment of prescribed fees.
  • The importer will be required to comply with other laws and regulations governing the importation of minerals.
  • Before importing diamonds the importer must obtain a diamond import clearance from the Mining Commission.
  • The diamond import certificate shall be submitted to the Kimberly Process Certification System. 

When passed into law (which we understand will be imminently), the Mining Act Amendment Bill will have a significant impact. The main points to note include:

  1. the wide definition of "mineral ore", which encompasses all naturally occurring material in the form of rocks or sediments from which economically viable minerals can be extracted;
  2. the inclusion of the definition of the term "tailings", which are materials left over after the extraction of the mineral ore, which suggests a drive to get as much out of the mining sector as possible; and
  3. the fact that tailings and mineral ores can be traded in Tanzania, thus providing an opportunity to collect more revenue.

Highlights of the Mining Local Content Regulations

The New Local Content Regulations amend the Mining (Local Content) Regulations that were created in 2018 (the Old Local Content Regulations). These amendments include the following:

  • An indigenous Tanzanian company shall have at least 20% of its equity owned by Tanzanian citizens;
  • Period of review of the local content plan extended;
  • Non-communication by the Mining Commission will not be deemed to constitute approval;
  • Additional minimal local content levels to consider views of stakeholders;
  • The terms Tanzanian financial institution / organization / foreign financial institution to be defined by reference to the Banking and Financial Institutions Act 2006; and
  • Requirement to operate a bank account and transact business with a Tanzanian bank.

While the Old Local Content Regulations required an indigenous Tanzanian company to have at least 51% of its equity owned by Tanzanian citizens, the New Local Content Regulations have reduced this to 20%.

The Local Content Committee was required to communicate its recommendations to the Mining Commission within 25 working days; this period has been extended to 60 working days. If satisfied with the local content plan, the Mining Commission shall approve it and communicate its decision to the applicant within 30 working days instead of 7.The Mining Commission's decision not to approve a local content plan shall also be communicated within 30 working days as opposed to 7.

Non-communication by the Mining Commission of its approval on the local content plan submitted or regarding the revised local content plan after the expiry of 50 working days will no longer mean that the local content plan has been approved; instead an applicant shall have to wait until the same is specifically communicated to them.

The term "indigenous Tanzanian bank" has been replaced with the term "Tanzanian bank" with the requirement to have not less than a 20% Tanzanian shareholding instead of the previous requirement of a majority Tanzanian shareholding. A contractor, subcontractor, licensee, or other allied entity shall now maintain a bank account with a "Tanzanian bank" and transact business through them.

While the New Local Content Regulations continue to support the spirit of local content reflected in the Old Local Content Regulations and other supporting legislation, it is clear that stakeholders' views were considered, with the aim of improving investment opportunities, specifically in the mining sector.

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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Authors
Peter Kasanda
Amalia Lui
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