Tanzanian Mining Act 2010

On 23 April 2010 Tanzania's Parliament passed The Mining Act 2010 (the Act). The Act is a composite of a document presented to Parliament (the Initial Reading), together with a schedule of amendments (the Amendments). The Act has yet to be Gazetted and thus is not yet in force, though it is reputed to be under a "Certificate of Urgency" and therefore is expected to come into force shortly.

The intention of the Government of Tanzania (the GOT) is to within the Act address challenges that the GOT has identified in relation to the mining sector in Tanzania; specifically, low integration with other sectors of the economy, low contribution to the Gross Domestic Product compared to the sector growth and low capacity of the GOT to effectively regulate and administer the sector.

Industry concerns

The Act is more restrictive than its predecessor and is consistent with other recent legislation which seeks to concentrate a greater interest in the hands of Tanzanian nationals with increased regulation in key sectors whilst continuing to encourage inward investment. Some of the publicly expressed concerns were due to the restrictions contained in the Initial Reading (such as reservation of mineral rights and licenses for dealing in minerals being reserved to Tanzanian citizens and corporate bodies under the exclusive control of Tanzanian citizens) which were subsequently relaxed by the provisions of the Amendments. However, the Act does materially increase the levels of royalty payable to the GOT and places restrictions on non-Tanzanian participation in small scale mining, dealing in minerals and gemstone operations.

There are concerns within the industry that the restrictions will have a negative impact on the Tanzanian mining industry both in terms of its competitiveness and as a magnet for foreign investment.

We have yet to see an official copy of the Act, so our comments are subject to sight of this.

Key provisions

The Act will introduce significant changes to mining policy, in particular the following.

(a) Mineral rights and licenses for dealing in minerals will be reserved exclusively to Tanzanian citizens and corporate bodies under the exclusive control of Tanzanian citizens. It has been said that agreements/licences currently in force with non Tanzanian controlled mining companies remain unchanged but there is no clear "grandfathering" provision on this. The main point to note, however, is that the Amendments significantly mitigated the...