Amendments To The Mining Act In Tanzania

Following the extensive amendments to the Mining Act, Cap.123 of the Laws of Tanzania (Act No. 14 of 2010) (the Mining Act) by the Tanzania Extractive Industries (Transparency and Accountability) Act, 2015 (TEIA) whereby a number of changes affected mineral rights holders, the Mining Act had two further amendments in 2017 as a result of a change in the Tanzanian government's (Government) approach on the mining sector, amongst others.

The first round of amendments in 2017 were brought in terms of the Finance Act, 2017. These amendments increased the royalty rate from 4 to 6 per cent with respect to minerals exports such as gold, copper, silver and platinum. This increase has attracted some debate on how the change would affect the mining sector. In addition, the amendments introduced a clearing fee of 1 per cent (as a new requirement) on the value of all minerals exported outside Tanzania from 1 July 2017. Some stakeholders have argued that the increase in the royalty rate will have a negative impact on foreign investment in the sector.

The second round of amendments in 2017 came into effect in July in terms of the Written Laws (Miscellaneous Amendments) Act, 2017. These amendments were a result of recommendations to the Government by the President Committee established to investigate the export of metallic mineral concentrates. In particular, these amendments changed the shareholding structure requirements. It is now mandatory for all Mining Licensees or Special Mining Licence holders to give the Government at least a 16 per cent free carried interest in the capital of their companies. The Government is also entitled to acquire (in total) up to 50 per cent of the shares in a mining company, proportional with the quantified value of tax expenditures incurred by the Government in favour of the mining company.

These amendments also established the Mining Commission (Commission) which replaces the Mining Advisory Board (Board). The Commission has been empowered to perform additional functions to the Board. The Commission, apart from having advisory functions, has been empowered to (i) issue licences, (ii) regulate and monitor the mining industry and operations, and (iii) ensure orderly exploitation and exploration of minerals (as well as the utilisation of minerals). In addition, the Commission has the power to resolve disputes arising from mining activities and to carry out inspections and investigations on safety issues.

In terms of these...