Tanzania

Tanzania – the climate for mining

Tanzania is in central East Africa and is bordered by Kenya, Uganda, Rwanda, Burundi, the Democratic Republic of the Congo, Zambia, Malawi and Mozambique.

It has a population of over 40 million with 80% living in rural areas. The legislative capital is the city of Dodoma, while the coastal city of Dar es Salaam serves as the main commercial capital and seaport.

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Government

The President and the members of the parliament (the National Assembly of Tanzania) are elected concurrently by direct popular vote for 5-year terms. The President selects the Prime Minister and the cabinet among National Assembly members. The most recent national election took place in October 2010.

Since the mid-1980s there has been a move in favour of private sector development and market-oriented economic management.

Tanzania has an established legal and regulatory framework for mining companies, as well as a history of stable and democratically-elected governments.

Economy

Tanzania’s economy is largely based on agriculture, but the country also has vast quantities of natural resources.

  • Tanzania is rich in gold, diamonds, coal, iron ore, uranium, nickel, chrome, tin, platinum, coltan, niobium and other minerals.
  • It is the fourth-largest producer of gold in Africa, and one of the continent’s fastest- growing.
  • The country encourages direct foreign participation. Investment-friendly changes in legislation and mining laws are stimulating a steady increase in foreign interests.
  • Gold mining in particular has responded to this catalyst with investment of more than US$2bn since 1998. (Source: World Gold Council, 2009.)
  • Gold mining activity is expected to double Tanzania’s already significant annual foreign exchange earnings, reaching US$1.4 billion by 2012-2016. (Source: World Gold Council.)
  • Gold production is forecasted to peak in 2016, with production rising to 1.55 million ounces by 2012. (Source: World Gold Council, 2009.)

Currency

The Tanzanian currency is the shilling (‘TZS’) and is divided into 100 senti. However, US dollars are also widely used.

Taxation and exchange controls

The standard rate of income tax in Tanzania is 30%.

Mining Legislation

The Tanzanian mining industry is regulated at national level and governed by the Mining Act, 2010 (Mining Act) and supporting Regulations. It was previously governed by the Mining Act 1998 (old Act) and supporting Regulations.

The principal regulatory body is the Ministry of Energy and Minerals under which there is a Minister, an appointed Commissioner for Minerals, a Mining Advisory Board and an appointed Chief Inspector of Mines.

Under the Tanzanian mining regime, the United Republic of Tanzania owns the mineral rights in, on or under all land, which are then licensed to mining companies by the Ministry of Energy and Minerals.

Generally, under the Mining Act mining licences must be obtained for all mining in Tanzania, which may only be granted to Tanzanian citizens and/or companies incorporated locally. Special Mining Licences may also be granted for either Superficial or Non-Superficial Deposits. The applicant for a mining licence is required to submit Environmental Management Plans, local employment and training plans and local procurement plans, and to operate in accordance with these plans upon grant of the licence. In addition, the Government may also enter into specific Mineral Development Agreements in accordance with the Act, mainly for purposes of achieving tax and fiscal stabilisation.

In addition to mining licences, the Ministry of Energy and Minerals has the power, subject to certain conditions and restrictions, to grant prospecting licences and retention licences. Prospecting licences provide for exclusive prospecting rights for minerals in defined areas. Retention licences protect an identified mineral deposit within licensed areas which is potentially of commercial significance, but cannot be immediately developed due to technical constraints or market conditions of a temporary nature.

ABG has mining and exploration rights granted under both the Mining Act and the old Act. It has obtained the relevant mining licences for all of its mines and has entered into mineral development agreements and other supporting agreements for each of its operating mines. ABG also owns or controls, through prospecting licences or third party agreements, extensive exploration holdings in Tanzania.