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US legislation describes Tanzania as a "DRC Country"

Discussion in 'Jukwaa la Sheria (The Law Forum)' started by EMT, Mar 2, 2011.

  1. EMT

    EMT JF-Expert Member

    Mar 2, 2011
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    • US legislation classifies Tanzania as source of ``conflict minerals``

    • Govt officials say it`s a mistakes and will ensure name is removed from list

    The national economy faces an uncertain future after a new US law classified Tanzania as a source of "conflict minerals", threatening annual gold export earnings to the tune of USD75 million and thousands of jobs in the mining sector.

    The Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by United States President Barack Obama in July last year was aimed at improving transparency and accountability in the supply of minerals coming from the conflict zones of the Democratic Republic of Congo (DRC).

    However, the controversial 2,300-page legislation erroneously describes Tanzania as a "DRC country" and imposes burdensome new mineral export regulations on it.

    The legislation identifies "conflict minerals" as gold, wolframite (tungsten), cassiterite (tin) and columbite-tantalite (coltan) from the DRC and the nine adjoining countries -- Tanzania, Central African Republic, Sudan, Uganda, Rwanda, Burundi, Zambia, Congo and Angola. These minerals are commonly utilised in a variety of commercial products, such as automobiles, cellular phones, and airplane engines.

    The legislation therefore affects a large spectrum of global industries, including technology, automotive, mining, jewellery, and aerospace. A submission made by the Tanzania Chamber of Minerals and Energy (TCME) to the London-based World Gold Council (WGC) warns that Tanzania could shed up to 2,000 jobs in the mining sector due to the burdensome new regulations created by the law.

    "For example, a 10 per cent reduction in demand for gold from Tanzania would result in a reduction of around $200 million in FDI due to a reluctance to develop projects," said part of the submission.

    "We believe that as drafted, the proposed rules may cause perverse and unintended consequences since it is likely to motivate issuers to avoid sourcing gold from the so-called "DRC countries" because of the compliance costs and legal liability issues associated with so doing," said TCME.

    Tanzania produces over 61 per cent of the total gold produced by the so-called DRC countries cited in the US legislation. TCME said the US legislation could discourage foreign direct investment (FDI) inflows into Tanzania by reputable international companies. "This may, in particular, penalise Tanzania, as the largest gold producer in the region."

    TCME said the legislation could discourage legitimate and responsible mining investment in Tanzania, contrary to the international community's objectives of promoting growth and prosperity in developing countries. "We are very concerned that at any point in the supply chain for gold, an actor may determine that the uncertainties in the process, the costs of due diligence and audit, or the reputational risks of defining their product or a constituent part as containing a "DRC conflict mineral" are too great to bear," said TCME.

    The Chamber said the US legislation could lead to "stigmatisation" of responsibly-produced gold in Tanzania. "This could in turn, result in substitution with minerals not covered in the legislation, such as copper replacing gold, substitution with gold from other countries not covered in the legislation and substitution with gold produced from outside of Africa," said TCME.

    As a result of the legislation, the US Securities and Exchange Commission (SEC) has added several new reporting requirements applying to companies listed on the New York Stock Exchange (NYSE), the world's largest financial market.
    Companies listed on the NYSE will be required to determine whether their products contain "conflict minerals," thus the need to conduct lengthy and costly due diligence on the source and chain custody of the gold.

    According to the World Bank, Tanzania has one of the strongest track records of political stability in Africa since becoming independent 50 years ago.

    The US Securities and Exchange Commission has set a deadline of Wednesday this week (March 2, 2011 ) to receive public comments and petitions from mining companies and governments of Tanzania and other countries that will be affected by the new rules.

    The Dodd-Frank Wall Street Reform and Consumer Protection Act require the SEC to issue its final rules by April 2011. "Indeed, in all aspects of governance, Tanzania is deemed to be considerably more advanced than the average in sub-Sahara Africa. The country is well advanced in seeking validation of its compliance with the requirements of the Extractive Industries Transparency Initiative (EITI) as a result of a close collaboration between the government, civil society and the mining sector," said TCME.

    When contacted, the Permanent Secretary in the Ministry of Energy and Minerals, David Jairo told The Guardian in an interview yesterday that the government has already taken up the issue related to the new US mineral legislation, and that some steps have been adopted to ensure that the laws and its corresponding rules and regulations do not affect the country's gold mining sub-sector.
    He declined to disclose details on the government's intention of submitting its petition or comments challenging the new US minerals law, only saying: "We are at an advanced stage in handling the matter but you can get more details from the Commissioner of Minerals."

    The Commissioner of Minerals, Peter Kafumu, said as for now, Tanzania was not intending to submit any petition against the new US mineral Act because "we are part of the conflicts, as mentioned in the legislation."

    "Drafters of the Act mentioned Tanzania as part of DRC. They made a mistake to mention Tanzania as part of DRC, and as one of conflict-prone countries…we are a conflict-free country," said Kafumu, adding: "We will not be affected by the new US mineral Act, because we are not a conflict country…that is we don't see the need to submit a petition to challenge this law."

    He, however said Tanzania was one of the three African investment destinations after Botswana, noting even investors from US were satisfied with the investor-friendly environment set up in Tanzania.

    Regarding the negative impact of a mention by the new US legislation, describing it as a source of conflict mineral (gold), Kafumu said the government was using diplomatic approach to rectify the mistake. "There are things which we are doing underground, which I cannot tell you. I want to assure people that, although Tanzania was erroneously mentioned as a source of conflict minerals in the new US mineral legislation, our gold production and mineral sector - in terms of revenue and employment, will not be affected...are not worried; there is nothing to worry," said Kafumu.

    As the most valuable of its exports, gold plays an important role in the economic growth of Tanzania, which also contributes to the political stability of the country.
    Tanzania is Africa's third largest gold producer. Gold production from the country rose from 40.9 tonnes in 2009 to 44.6 tonnes in 2010.

    The value of gold produced in Tanzania in 2010 jumped to $1.77 billion from $1.076 billion the previous year. In 2009, gold mining in Tanzania was estimated to provide employment to around 11,000 Tanzanians and an additional 1,100 expatriate workers as the construction of mines reached its peak.

    It is estimated that over the lifetime of five gold mines operated by World Gold Council (WGC) members in Tanzania, total tax revenues will amount to $3.5 billion, with annual tax revenue of around $280m in 2017.

  2. LordJustice1

    LordJustice1 JF-Expert Member

    Mar 2, 2011
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    JK kujikomba kote kwa Obama hakujasaidia kitu! Ama kweli ng'ombe wa maskini hazai!
  3. EMT

    EMT JF-Expert Member

    Mar 4, 2011
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    Tz haijulikani kwa Obama.
  4. Utingo

    Utingo JF-Expert Member

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    when is the last time Tanzania as a country exported gold? kwanza do we have gold at all? If we have do we own it?
  5. M

    Matarese JF-Expert Member

    Mar 4, 2011
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    Tatizo sisi wabongo tunadanganyana mno kuhusu kujulikana kwetu nje ya nchi, aidha kwa kutokujua au mara nyingine kwa kupotoshwa na vyombo vya habari, mara ooh tunasifika kwa amani duniani kote, mara ooh, kila mtu anaijua Tanzania dunia nzima, wakati ukweli si hivyo. Mwaka 2009 nilitembelea nchi fulani ya Ulaya kwenye mkutano tena wa watu walioenda shule. katika kila watu 10 nilipojitambulisha mm natoka Tanzania, kwa wastani ni watatu tu ndio walikuwa wnaijua TZ. Tena ktk hao watatu, wawili waha location ilikuwa inawashinda, yaani hawajui ipo west afrika, south afrika au wapi!