Players query need for Tanzania’s new mining probe


JF-Expert Member
Feb 11, 2007
Players query need for Tanzania’s new mining probe

Special Correspondent

Yet another committee has been appointed to probe the mining sector in Tanzania just two years after a previous committee submitted its report — which appears to have been ignored by the government.

The move has heightened uncertainty in a sector that has already endured decades of political interference.

Tanzanians and investors in the mining sector are anxiously awaiting the report of a committee led by the country’s first attorney general, Justice Mark Bomani, which is due to be presented to the government next February. President Jakaya Kikwete appointed the team last month to study legislation and other aspects governing the sector.

However, a previous committee headed by Dr Jonas Kipokola and appointed by former prime minister Frederick Sumaye to review the existing legislation in the mining sector made recommendations that are yet to be implemented.

The report of the Kipokola team advised the government to buy shares in mining companies. It also recommended that the ownership of shares by Tanzanian nationals and the government in big mining companies be encouraged in order to reap benefits from the fast growing sector. The report was released two years ago.

It asked the government to take part in mining by buying shares during the exploration stage; investing in infrastructure meant for mining; and undertaking initial exploration, with the expenses incurred at this stage being its contribution to investment capital.

It was further suggested that the government engage in mining activities through the State Mining Corporation (Stamico) and National Development Corporation (NDC). These organisations would undertake research and exploration, then use their findings to look for joint venture partners for the actual mining.

Nazir Karamagi, the Minister for Energy and Minerals, told The EastAfrican in Dar es Salaam last week that recommendations from such committees are worked on, but that the public often don’t see changes or amendments to statutes as resulting from these recommendations.

Mr Karamagi said his ministry would create an information desk to make it easier for the general public to get facts on the mining sector.

Justice Bomani said in Dar es Salaam last week that the committee has perused previous reports on the mining sector.

“We are looking at the mining sector in all its totality, which includes policy, laws and mineral development agreements. We are also visiting the mines. We will present our findings to the president,” he said.

The previous committee undertook similar work under the former president, Benjamin Mkapa. Few, if any, of its recommendations were implemented.

The Kipokola report said the government had made a wise decision not to engage in mining activities through direct involvement in the running and operations of the mines. “The running of modern mines requires expertise, technology and huge capital investments, which the government lacks. It is general practice that governments the world over don’t use their national budgets to run mines.

“However, the mining policy allows the government to strategically participate in projects that are economically viable. This has enabled other countries to benefit by up to 50 per cent of ownership of and to derive income from mining without themselves being involved in the day-to-day management of the mine,” says the report.

In order to effectively monitor the sector, Dr Kipokola’s team had suggested that the government create a department to follow up on developments in the mining sector and identify projects to invest in.

Dr Kipokola’s report suggested that the Mining Act be amended to provide incentives to big mining companies to list on the Dar es Salaam Stock Exchange in order to allow Tanzanians buy shares in these firms.

“We should encourage the purchase of shares by Tanzanians using unit trusts and mutual funds or create banks supported by the mining sector that would in turn lend money to nationals to buy shares,” said the report.

The committee further said that the law provides for local ownership of 25 per cent shareholding (through divided and undivided shares) in gemstone mining.

“But the country’s mining policy is silent on the same. It is suggested that participation of Tanzanians in this area should not be restricted to owning shares only but actual running of the mines in order for them to acquire skills,” said the report.

In order to acquaint itself with what was happening in the sector in other countries, the previous committee visited Botswana so as to learn about how the government could earn shares in the big mining companies. It also visited South Africa in order to study how to empower locals to effectively take part in large scale mining activities.
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