Recent Changes To The Mining Act In Tanzania Have Significant Ramifications For Service Providers

The recent changes to the Mining Act in Tanzania have significant ramifications for service providers to the Tanzanian mining industry (Service Providers). Urgent legal advice should be sought to ensure compliance with the new legislation.

Pursuant to the Written Laws (Miscellaneous Amendments) Act 2017 (as published in the Gazette No. 27, Volume 98 dated 7 July 2017) a wide variety of changes were made to the Tanzanian Mining Act 2010.

New local content requirements: The new local content provisions that have been introduced are of particular importance to Service Providers. The new section 102 (1) provides as follows:

"(1) A mineral right holder shall give preference to goods which are produced or available in Tanzania and services which are rendered by Tanzanian citizens and or local companies."

This effectively introduces a new legal obligation under mining companies to ensure that preference is given to Tanzanian citizens and local companies.

The relevant definition of "local companies" for this purpose is: "a company or subsidiary company incorporated under the Companies Act, which is one hundred percent owned by a Tanzanian citizen or a company that is in a joint venture partnership with a Tanzanian citizen or citizens whose participating shares are not less than fifty one percent".

Accordingly in order to satisfy the definition of local company for the purposes of this new legislation - a non-Tanzanian company must enter into a joint venture arrangement - with at least a 51% interest held by Tanzanian citizens.

Section 102 (2) and (3) goes on to provide:

"(2) Where goods required by the mineral right holder are not available in Tanzania, the goods shall be provided by a local company which has entered into a joint venture with a foreign company.

(3) The local company referred to in...