Tanzania Overhauls Legal And Regulatory Regime For The Extractive Industry

Tanzania has enacted three pieces of legislation that introduce sweeping changes to the legal and regulatory regime governing the natural resources extractive industry.

The new laws are the Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Bill, 2017; the Natural Wealth and Resources (Permanent Sovereignty) Bill, 2017 (the "Permanent Sovereignty Bill") (awaiting assent by the President); and the Written Laws (Miscellaneous Amendments) Act, 2017. The latter extensively amends the Mining Act, 2010 and, to a limited extent, the Petroleum Act, 2015.

The Permanent Sovereignty Bill reasserts that control and ownership of natural wealth shall be exercised by the people of Tanzania through the government and held in trust by the President on behalf of the people. Unlike the old regime, the Bill extends state ownership to production arising from extraction of natural wealth resources. It further provides for:

abolishing the export of raw minerals for beneficiation outside the country; abolishing the retention of mineral earnings in banks outside the country; prohibiting proceedings in respect of national wealth and resources in foreign courts or tribunals; and the review of new and existing agreements by the National Assembly, subsequent to which the government may be ordered to renegotiate terms deemed unconscionable. The laws will affect licence tenure in view of the provision empowering the Executive to declare certain areas that are the subject of mining operations "controlled areas" without excluding areas that are the subject of granted mining licences. This issue may be clarified in the regulations, which the law requires the Minister to introduce to operationalise the process pursuant to which such declaration may be made.

The government will have at least 16% equity in all mining operations under a mining licence or a special mining licence, and such equity cannot be diluted. The government is further entitled to up to 50% equity of the shares of a mining company in proportion to tax benefits enjoyed by the company. The law provides that such a tax benefit, defined as "tax expenditures", will be the quantified value of tax incentives granted to a mining company by the government. The law makes no reference to the mandatory listing requirements for mining companies, which must list 30% of their equity on the Dar es Salaam Stock Exchange. Further clarification will likely be provided in the regulations...