Tanzania: Mining – How CCM Delivered On Its Pledges

Tanzania Daily News (Dar es Salaam)

20th August 2020

By Bernard Lugongo

IN the CCM’s 2015 Election Manifesto, the party made a number of pledges on boosting the country’s mining sector development.

The question now lingers on how the party has walked the talk, five years down the line now before the 2020 General Election.

In its outgoing manifesto, CCM promised to push production and promote the issue of minerals markets.

Recently, the party’s National Chairman, President John Magufuli mentioned that regional minerals markets have been introduced in implementation of the promise.

These government-controlled selling and buying centres are meant to optimize mineral trading to benefit not just multinationals, but also small-scale miners, brokers and dealers.

Other major initiative was to increase participation of small business people in the mining value chain, which involved scrapping or reducing some of the levies that were affecting their operations.

The party further wrote in its manifesto that in a period of five years, it would have strengthened control on transportation of minerals and kept effective management of minerals at mines.

In 2017, the government banned exports of mineral concentrates and ores for metallic minerals such as gold, copper, nickel and silver, saying the decision was meant to ensure that Tanzania gets its rightful share of proceeds from large-scale mining by establishing exact content of the minerals before export.

This yielded positive results, since it led to fresh agreements between the government and the Barrick Gold Corporation which was considered a win-win situation.

Tanzania embarked on crafting a new Mining Act which has now, among other things, increased the royalty rate from 4 to 6 per cent with respect to minerals exports such as gold, copper, silver and platinum.

Also, it is now mandatory for all mining licensees or special mining licence holders to give the government at least a 16 per cent free carried interest in the capital of their companies.

The government is also entitled to acquire (in total) up to 50 per cent of the shares in a mining company, proportional with the quantified value of tax expenditures incurred by the government in favour of the mining company.

These amendments also established the Mining Commission (Commission) which replaces the Mining Advisory Board (Board).

The Commission, apart from having advisory functions, has been empowered to issue licenses, regulate and monitor the mining industry and operations, and ensure orderly exploitation and exploration of minerals.

This new law also led to the formation of the Twiga Minerals Corporation, which is jointly owned by the government and the Barrick Gold Corporation.

In the agreement, the new company is 84 per cent owned by Barrick and 16 per cent by the government, and is based on 50/50 sharing of the economic benefits generated by the mining operations after the recoupment of capital investments.

The new agreement with the Barrick also saw the company paying $100m (250bn/) to the government, which is the first tranche of $300m owed to the Tanzanian government after the sides agreed in 2019 to settle allegations of the unpaid tax.

On the other hand, CCM pledged to implement special strategies that would enable wide market for Tanzanite, and thus bring more revenue to the country.

President Magufuli’s government has constructed the 24 kilometre perimeter wall surrounding the Tanzanite mines in Mirerani in the northern Manyara Region to curb smuggling of the rare gemstone.

Furthermore, the party vowed in its manifesto that during the first term of the fifth phase government, it would ensure that small scale miners are empowered to the extent that they are able to create jobs in the sector, whereby hundreds of artisanal miners have been formalized.

Some of the initiatives made were to increase participation of small business people in the mining value chain, which involved scrapping or reducing some of the levies that were affecting their operations.

The growth of the mining sector and revenue collections trend has been impressive during five years of the first term of President John Magufuli, thanks to various measures adopted to improve the industry.

Last year, mining was listed as a fast-growing sector, topping all others with a growth rate of 17.7 per cent, followed by construction sector which grew by 14.1 per cent.

Statistics further indicate that in the 2018/19 fiscal year, mineral resources have earned the country 346bn/- from 194bn/- recorded in the 2016/17.

The revenues further increased to 470bn/- during the current 2019/20 financial year.

Another major reform made in the sector was establishment of the special ministry for minerals.

SOURCE: https://dailynews.co.tz/news/2020-08-205f3e23dc40cce.aspx

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