LAWS AND GUIDELINES GOVERNING MINING INDUSTRY IN TANZANIA

By, LEAT

Extractive Industry Unit

INTRODUCTION

Tanzania is endowed with a number of minerals, including precious metals, gemstones and natural gases such as Uranium. The mining industry for a long time in Tanzania especially during Mwalimu Nyerere’s regime was a stagnant sector in the sense that very few mining activities were taking place in the country. Currently, Tanzania has a booming sector where both small scale and large scale mining are taking place in the country.

Mining is increasingly becoming the leading sector in Tanzania in terms of exports. During the last ten years Tanzania has witnessed high growth in mining sector. Reputable mining companies such as Barrick Gold, Ashanti Anglo-Gold, Placer Dome and Resolute are operating large-scale mines in Tanzania. There are also small scale mining areas like Winza-Dodoma, Maganzo- Shinyanga, Ngoma-Mwanza, etc

LEGAL FRAMEWORK OF THE MINING INDUSTRY

The main legislation under which mining activities are regulated in Tanzania is the Mining Act, No. 5 of 1998. However, this Act was repealed by the Mining, No.14 of 2010 which was passed in 2010 under the certificate of urgency. Other relevant statutes include the Constitution of the United Republic of Tanzania, 1977; the Income Tax Act, 2004; Environment Management Act, 2004, Tanzania Investment Act, 1997, etc

Although the Mining Act, 1998 has been repealed, all subsidiary legislations made under the same continue to be in force until when the new rules are made by the Minister or the old rules are revoked. This is by virtue of Section 116 (2) of the Mining Act, 2010. Because of this saving provision regulations made under the Mining Act, 1998 such as Mining (Environmental Management and Protection), GN. No. 218 of 1998; and Mining (Safe Working and Occupational Health), 1999; and Mining (Dispute Resolutions) Rules, 1999, are still operative.

KEY AREAS TO BE ADDRESSED BY THE MEDIA

The media plays a crucial role informing the public about the going-on of the mining industry in the country and comparative global mining operation, and therefore provide a constructive input in proper management of the mining industry in Tanzania. The following are selected key areas to be addressed by the media:  

 

MINING ACT, NO. 14 OF 2010: ENACTMENT PROCESS

On 23 April 2010 Tanzania's Parliament passed The Mining Act 2010. 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.

Although it is legally permissible for the ministry to table a bill under a certificate of urgency with the consent of the President, this practice is increasingly subject to criticism as it limits the opportunity for public consultation and debate. Under normal procedures a bill is read for the first time without debate, allowing the responsible committee ample time to consult with the public and analyze the bill prior to debate in the subsequent session (second reading). But the certificate of urgency compresses this process into a single session.

  BENEFIT SHARING AGREEMENTS

Generally, there must be a trend towards improved multi-stakeholder interactions with greater community participation in benefit sharing, and consultations moving from a paternalistic to a partnership approach. The Government of Tanzania should therefore enter into agreements (BENEFIT SHARING AGREEMENTS) with mining companies which emphasizes benefit sharing with communities around mining projects. Some of the things to be covered in benefit sharing agreement include, mechanisms of community engagement, employment of indigenous persons, establishing community programs, establishment of charitable donations programs, and plans in place to help a community transition post-mining

    NATIONALISATION/EXPROPRIATION AND LAND ACQUISITION

The Constitution of the United Republic of Tanzania, 1977 is the fundamental law in Tanzania, overriding all other legislation. Article 24 of the Constitution guarantees the right to own property and to protect it in accordance with the law. There is, therefore, a full recognition of private property and protection against any non-commercial risks. The Tanzania Investment Act, No. 26 of 1997, under Section 22(1) also guarantees mining business as against nationalization or expropriation by providing that, no business enterprise shall be nationalized or expropriated by the government. Subsection (2) of the same provision goes on stating that,

“there shall not be any acquisition, whether wholly or in part of a business enterprise to which this Act applies by the State unless the acquisition is under the due process of law which makes provision for- (a) payment of fair, adequate and prompt compensation, and (b) a right of access to the Court or a right to arbitration for the determination of the investor's interest or right and the amount of compensation to which he is entitled.”

Land acquisition has been reported as one of the problematic stage of the mining industry under which land occupiers prior mineral discovery lost their land without compensation, or inadequately compensated. Land acquisition should therefore conform to, and not violates, the right to own property as granted by Article 24 of the Constitution of the United Republic of Tanzania, 1977. Subsection (2) of the same Article provides clearly that it shall be unlawful for any person to be deprived of his property for the purposes of nationalization or any other purposes without the authority of law which makes provision for fair and adequate compensation.

The other law is the Land Acquisition Act, 1967, No.38 of 1967 under which Section 4(1) is to the effect that, land acquisition will be just and legal if only it is done by the President for public purpose. Even though land acquisition is legally justifiable in Tanzania, that very fact goes parallel with the right to adequate and prompt compensation the affected. This is in agreement with the provisions of the Land Act, No. 4 of 1999, and the Village Land Act, No.5 of 1999.

KEY CHANGES UNDER THE NEW LAW

The Act introduces significant changes to mining policy; the following are selected key changes;

Licenses to mine for gemstones are only to be granted to Tanzanians, regardless of the size of the operation, except where the Minister determines that the development is most likely to require specialized skills, technology or a high level of investment in which case the license may be granted to an applicant so long as the non- Tanzanian participation element is no more than 50%. This is according to Section 8(4).

The Act gives the Minister power to prescribe a standard model form Mining Development Agreement for all projects exceeding US $100m.  So far no standard form has yet been prescribed. This is provided by Section 8(4).

It amends the method by which GOT royalties are calculated so that they will in future be levied on the gross value of minerals, rather than the present method of calculation which refers to the net value. As provided by Section 87.

It increases the rates of royalties levied by the GOT on the gross value of minerals as follows:

1.      uranium – 5%

2.      gemstone and diamond – 5%

3.      metallic minerals (copper, gold, silver, and platinum group) – 4%

4.      gem – 1%

5.      In the case of other minerals, including building materials, salt, all minerals within the industrial minerals group – 3%

The Act requires a greater degree of disclosure by the holders of mineral rights in respect of reports, records and general information. Section 100 and Second Schedule.

MINING AND ENVIRONMENTAL PROTECTION

In respect of Environmental management, Section 10 (4) (d) of the Mining Act, 2010 which provides that the Minister for Mineral Resources may enter into agreement called ‘ DEVELOPMENT AGREEMENT’ in which among the things to be covered is ENVIRONMENTAL ISSUES; similar provision is  provided by Section 10 of the Mining Act, 1998. In addition Section 12 of the Mining Act, 2010 states that the ‘DEVELOPMENT AGREEMENT’ will be reviewed periodically after every five years to evaluate compliance with the requirements contained therein.

Another important environmental aspect is the Environmental Impact Assessment (EIA) which is a scientific assessment of the possible positive or negative impact that a proposed project may have on the environment. The Mining Act, 1998 under Section 53 articulates the conditions which must be attached to a Mining License and these conditions covers environmental aspects including the requirement of EIA. The Mining (Environmental Management and Protection) Regulations, 1998 under Regulation 3 states that EIA will be conducted in every mining activity at the discretion of the Minister responsible for Mineral Resources.

However, EIA is now a mandatory requirement for mining projects, as per Section 81 of the Environmental Management Act, No. 20 of 2004, in that any proponent or developer of a project listed under the Second schedule to the Act is required to undertake an EIA, at his own cost. Mining is one of the listed projects. Section 232 of the Environmental Management Act provides that where any provision in the Act is in conflict or otherwise inconsistent with the provisions of any other law, the provision of the Act has to prevail. Therefore EIA is mandatory.

The aspect to be looked at is Rehabilitation bond and protection of the environment, which is provided under Section 112(5) of the Mining Act, 2010, requires every investor to deposit a certain amount of money with the government for purposes of covering the costs of rehabilitation of mining sites after finishing the project.

CONCLUSION

The Mining industry lays a hand on various socio-economic and political sectors. Sector participants should therefore take a holistic view as to the mining investment parameters, including reference to not only royalties levied but also income tax rates, withholding tax rates, capital deduction allowances, resourceful legal framework, and sound benefit sharing agreement. Mining industry should therefore be for sustainable development of the country.