Tanzania Plans New Mining Laws in Two Months

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It's about time but this has taken way too long and a lot of money has already been lost.

Tanzania Plans New Mining Laws in Two Months, Minister Says
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By Sarah McGregor

Feb. 18 (Bloomberg) -- Tanzania, Africa’s third-biggest gold producer, will introduce new mining laws within two months, Energy and Minerals Minister William Ngeleja said.

“We had a commitment of April,” Ngeleja told reporters today in the commercial hub of Dar es Salaam. “We are right on course.”

A 12-person review committee set up by Tanzanian President Jakaya Kikwete last year recommended ways in which the East African nation could boost mining revenues and reduce the industry’s environmental and social costs.

The panel suggested the government own 10 percent of all mining companies. Royalties on gold should increase to 5 percent from 3 percent, the report said. The royalty on rough diamond and gemstones should be raised to 7 percent from 5 percent, while that for cut and polished stones should rise to 3 percent from zero. Tax relief on fuel imports for miners should be replaced with a levy and the money used to build roads, it said.

A draft of proposed changes to the mining industry circulated by the government in December included increasing partial state ownership of mines, Tundu Lissu, mining program manager at the Dar es Salaam-based Lawyers’ Environmental Action Team, said today in an interview in the city.

“There was talk of more joint ventures with the private sector, which is a shift from the previous ideology of complete corporate ownership,” said Lissu. “They are also talking about increasing taxes.”

Tanzania’s mining and quarrying industry probably expanded by 11.9 percent in 2008, compared with 10.7 percent a year earlier. It makes up 3.4 percent of gross domestic product, according to statistics from the Finance Ministry. South Africa and Ghana are Africa’s biggest gold producers.

To contact the reporter on this story: Sarah McGregor in Dar es Salaam via Johannesburg at pmrichardson@bloomberg.net.

Last Updated: February 18, 2009 09:18 EST

Bloomberg.com: Africa

 

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What is left unsaid, according to Tundu Lissu, is that gold would be removed from the "strategic minerals" list. Currently gold accounts for 52% of mineral earnings. Another caveat is the so called "Foreign Investment Protection agreement," under which Tanzania would not be able to make changes to any Canadian investments in the country.