Mortgage Of A Mineral Right And Mining In Wildlife Conservation Areas

In this month's briefing, we look at the process to mortgage mineral rights and undertake mining operations in Wildlife Conservation Areas in Tanzania.

Legal Basis

The Mining Act of 2010 (the Mining Act) is the basic law which governs all mining and mineral activities in Tanzania. The Wildlife Conservation Act of 2009 (the Wildlife Conservation Act) is the principal act of parliament providing for all wildlife related activities.

A: Mortgage of a Mineral Right

Holders of Mining Licences, SpecialMining Licences and Primary Mining Licences (Mineral Rights) may mortgage their Mineral Rights to a financial institution, bank or any other person as a security for funds advanced to the mineral rights holder. The Mining Act does not expressly use the word 'mortgage' however it uses the term 'assign' which includes the right to mortgage or charge mineral rights. A mortgage of Mineral Rights is subject to obtaining the prior written consent of the licensing authority, however no such prior written consent is required if:

the mortgage or charge is to a financial institution or bank as security for a loan or guarantee; the assignment is to an affiliate where the obligations of the affiliate are guaranteed by the holder of the mineral rights or by the parent company of the holder of the mineral rights (an affiliate for this purpose means a company which directly or indirectly controls or is controlled by the holder of the mineral rights); or the mortgage or charge or assignment is provided in favour of another person who is considered to be the holder of the Mineral Rights i.e. where a Mineral Right is jointly owned by more than one person. The person applying for consent to mortgage or charge Mineral Rights is required to submit to the Ministry of Energy and Minerals (MEM) an application in the prescribed form as well as the following certified copies of documents:

application letter requesting for consent and giving summary of the transaction; executed Mortgage Agreement; executed Loan Agreement or letter of offer of a loan facility signed by the parties; certificate of incorporation and memorandum and articles of association, if the holder of the Mineral Right is a corporate body; copy of identification of the holder of the Mineral Right, if an individual; incorporation documents or copy of identification card of the mortgagee; copy of the Mineral Rights being mortgaged; and payment of the relevant taxes including stamp duty at the Tanzania Revenue...

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