Five committees later, Dar is to review 1997 mining policy

[BAK]

Five committees later, Dar is to review 1997 mining policy

By JOSEPH MWAMUNYANGE
THE EAST AFRICAN
Posted Saturday, January 3 2009 at 10:20​

After forming five different committees to study the legal and regulatory framework in the country's mining sector, Tanzania has finally embarked on a review process of the 1997 Mining Policy.

Minister for Energy and Minerals William Ngeleja said the purpose of the 1997 Mining Policy was to build a competitive mining sector and attract investors in the industry.

Mr Ngeleja added that, even with the prevailing achievements in the mining sector, there remain challenges that include the minimal contribution of the sector to the country's GDP in relation to the growth of the sector.

According to Mr Ngeleja, the achievements in the sector included an increase in its contribution to GDP from 1.4 per cent in 1997 to 2.7 per cent last year.

The minister said the policy had also helped to attract six large-scale gold mining companies, which on average produced 50 tonnes of gold in 2007 compared with one tonne in 1997.

Other achievements included the increase in the number of exploration activities, which boosted the level of investment from $1.3 billion in 1997 to $2.5 billion last year.

"There was, in addition, an increase in mineral exports, which reached 52 per cent of the country's total exports in 2007 compared with 1 per cent in 1997," he said.

The sector also recorded an increase in the number of employment opportunities. While it employed 1,700 workers in 1997, jobs at large scale mines had risen to 13,000 by last year.

The Ministry of Energy and Minerals said that, even with these achievements, the sector's contribution to GDP was still too low when compared with the growth.

The government at different times formed committees aimed at improving the sector in general and its contribution to the economy in particular.

They include the Mboma Committee, which was tasked with recommending the best way forward on the frequent confrontations between small-scale gemstone miners and TanzaniteOne, a large-scale miner at Mererani.

The Kipokola Committee recommended reform of the mining policy, participation of the government in mining ventures and review of the tax regime in the sector with a view to reviewing tax exemptions.

The Masha Committee had the mandate to examine existing mining contracts and the tax regime.

The Bukuku Committee was formed to implement the Masha Committee's recommendations. This led the government to review corporate tax and large-scale mines started providing $200,000 to local district councils.

Finally, the government formed the Bomani Committee, whose mandate was to collect a wide range of views from within and outside the country on the best way forward for the mining sector.

The Bomani Committee had the extra duty of examining all previous recommendations by its predecessor committees. One among its many recommendations, was that the government review the mining policy and law.

These statistics reveal that the contribution of the sector to the GDP is only 4.5 per cent, thus making it difficult to detect the sector's role in the economy," he said.

The level of investment in the mining sector needs to be taken to a higher level for it to contribute significantly to the economy.

The new policy and the new mining Act are expected to be tabled in parliament for approval next April.

The government has promised to incorporate views of the stakeholders at the two-day meeting in the new mining policy 2008 as a way of creating a win-win situation in the mining sector, said the Permanent Secretary in the Ministry of Energy and Minerals, Arthur Mwakapugi.

Mr Mwakapugi said that some of the areas that would be considered in the policy include the need to improve its format, situation analysis and mining sector evaluation.

According to Mr Mwakapugi, others are improvement of policy objectives and roles of government in addition to the need to improve statistics to show a clear picture of how the sector was performing.

The government has stated that due to the changing business environment in the world, there was need to change the mining policy adopted in 1997.

 

[BAK]

How to assure public it isn't being ripped off

By JOSEPH MWAMUNYANGE
THE EAST AFRICAN

Posted Saturday, January 3 2009 at 10:27​

The fifth committee to study the regulatory and legal procedures in the mining sector presented its findings to the president.

There was heated debate as to whether the sector was benefiting the nation before the president appointed the committee, headed by Judge Mark Bomani, to review the sector and the recommendations of four previous committees that had been gathering dust.

Before this, the government had engaged the services of a gold production auditing firm to audit all large-scale mines.

The auditors, Alex Stewart-Assayers-Government Business Corporation did not provide clear answers on what exactly was happening in the mining sector.

It was a bitter pill to swallow - the auditor gobbled up almost the entire money the government earns in form of royalties.

The engagement of the assayers has landed two former ministers and a just retired permanent secretary in trouble. Former ministers Daniel Yona and Basil Mramba and Gray Mgonja, a retired PS at the Finance have been arraigned in court.

The three have been charged been with abuse of office and causing the government to lose Tsh11.7 billion ($9 million) by engaging the assayers, extending the contract and granting tax exemptions against advice given by experts in government.

The mining sector has attracted increasing attention locally and overseas with the general public in Tanzania believing that they were being shortchanged by investors in the sector.

True or false, this is what people in government together with the Tanzania Chamber of Energy and Minerals need to work on - finding ways to defuse the tension between investors and local populations and, the negative perception that goes with mining activities in the country.

The recent attack on North Mara Gold Mine doesn't augur well for Tanzania's reputation as a peaceful and investor-friendly country. Some investors have even threatened to quit the country should such attacks continue.

The desire of the government to create a win-win situation in the mining sector, for investors and the country, still remains.

However, this would depend greatly on the prices of metals that tend to be very volatile.

So it would be in the interest of the government to act quickly and make its stand known now that the Bomani Committee's recommendations have been handed in and different stakeholders have been given a chance to present their views.

While many have been calling for the government to actively participate in the mining operations, little is said about the government's financial capacity to invest in risky and capital-intensive ventures such as exploration and actual mining.

The Tanzanian government's annual budget is so dependent on donor support, so setting aside money for investment in mining would be daunting task.

Tanzania's earnings from mineral exports (gold, diamonds and tanzanite) for 2007 stood at $866.3 million, compared with $16.1 million in 1997.

The sector's contribution to the GDP has also grown from 1.7 per cent in 1997 to 2.7 percent last year, a figure claimed to be very minimal when compared to the sector's growth.

Due to the reforms that have taken place, the country has managed to attract a total of $2.5 billion in foreign direct investment into the mining sector.

The sector's contribution to the country's foreign exchange earnings, which stood at 6.8 per cent in 1997, had last year risen to 42.1 per cent.

In establishing the 1997 Mineral Policy, the country's vision was to have a vibrant, well organised, private sector led, large and small-scale mining industry contributing over 10 per cent of GDP.

The policy in addition changed the role of government from active participant to that of facilitator, regulator and administrator - with the emphasis on private sector led mineral sector development.

Among the 1997 Mineral Policy targets were removal of discretionally powers, more transparency in issuance and administration of mineral rights and no mandatory government participation.

The review of the Mineral Policy targets such areas as improving the format, situation analysis and mining sector evaluation.

Others are improvement of policy objectives and government roles. There is also the need to improve statistics to show clear picture of how the sector was performing.

Recommendations from the five committees formed over the years to study the situation in the sector and recommend to the government on the best way forward have at least been taken aboard in formulating the new mineral policy.

These committees were the Mboma Committee, Kipokola Committee, Masha Committee, Bukuku Committee and the latest, the Bomani Committee.

All the other committees were formed by the Mkapa regime, but little was done to follow up their recommendations.

However, the future of mining in Tanzania relies heavily on what happens in April when parliament-starts debating changes and new statutes in the fast growing mining industry.

Besides looking at the legal and fiscal implications in the sector, the country must also take stock of the achievements (direct and indirect) that have been recorded in the sector over the years.

Modern housing units have sprang up in remote areas with water projects, hospitals, schools and teachers' houses, scholarships, business development and agriculture.

Note should also be taken of the downstream activities in the mining sector, which have yet to be exploited to the full.

The government must create the right environment for the local business community, farmers and manufacturers so that they can take advantage of the numerous opportunities available in the supply chain to mining operations.

There is also a need to provide infrastructure to enable investors to access areas with the potential for economic development.

Currently, poor infrastructure linkages to the ports, unreliable power supply and poor roads have hamstrung the sector.

Investors claim it costs them $4,000 to transport a container from Dar es Salaam port to Kahama by road while the same consignment would have cost $2,500 to transport by rail.

 

[Augustine Moshi]

And now we really must form one more committee to look at the recommendations of all the other committees and make recomnendation to government.

By the way, what was the cost of all the committee work so far? And where did the funding come from? It seems to me that we must be subsidizing the mining and expropriation of our gold very heavily.

I have a recommendation (if it is allowed to have a recommendation from something other than a committee). Sack all the big fish from the mining directorate. They have cost us enough pain.

 

[Kinyambiss]

the cost of the committee is irrelevant, ni pesa ndogo sana. HAYA madini yataisha baada ya 30-50 years. Tungetumia hizo pesa zake kujenga infrastructure ya huu uchumi wetu dhaifu ili basi tujue tumeyatumia vizuri... Kenya hawana madini kama sisi lakini GDP 10billion dollars wametuzidi kwasababu wazungu waliweka infrastructure na elimu. that is all that matters. Ufisadi sijui nini hizo hela ni ndogo sana, watu waadhibiwe, wakufungwa wafungwe lakini tu angalie elimu jamani, nchi huwa zinajengwa kwa kutumia miaka mingi sana.. so investing in the future is the only hope we have... sio jazba.