The Mining Industry In Tanzania: A Competitive Market?

His Excellency President John Pombe Magufuli of the United Republic of Tanzania took a gamble and dared what few sovereign nations in Africa dared to do. A little over a year ago, the government of Tanzania boldly took legislative and policy measures that are supposed to put Tanzanians at the heart of ownership of its natural resources, but also to allow the government as representatives of the Tanzanian people to benefit more from revenues generated from natural resources and just get a more equitable deal.

The debate on the sovereignty of a state over its natural resources along with the subtleties of tax evasion and avoidance was opened in the country through the creation of "special commissions". These were tasked initially with investigating best practices of beneficiaries of Special Mining Licenses such as "Acacia Mining" and "Tanzanite One" and subsequently, many other beneficiaries of mining licenses and even artisanal miners with primary mining licenses were also investigated.

As we know, Tanzania is rich in a diverse array of minerals, gemstones, gold, uranium, copper, gas, to mention a few. The reality is that these natural resources have not been the catalyst for positive change of the economy. It would be easy to blame operators and government officials from the standpoint of supposed endemic corruption.

So, with the current government's "zero tolerance on corruption" policy, do the mining laws that exist since July 1, 2017 and the ensuing regulations that were released in 2018, guarantee a conducive mining environment that can foster development and real benefits for Tanzania as a whole or have these laws made the Tanzania market for mining uncompetitive (compared to say Cote d'Ivoire, Zambia, Kenya, Ghana, South Africa, etc.)?

From a global point of view, the mining industry has been riding the wave of an uncharacteristically long down cycle. For example, the global market price for uranium is still at its historical low, to a point that most companies exploring and developing uranium have slowed down their operations dramatically or just stalled to venture and take off. In July of 2017, ROSATOM, which was due to start mining uranium in 2018 in southern Tanzania, postponed the Mkuju River uranium mine Project due to a depressed uranium market and prices being very low. It decided to postpone the development of the Project until the demand for uranium is restored, if it is ever restored.

The result of the slowdown is twofold...