Tanzania, the 4th largest producer of gold and the ONLY country to produce Tanzanite, has caught the eyes of a number of international mining majors who currently operate the production of 6 mines. The East African nation in 2003 was regarded as a yardstick for countries seeking to successfully build a greenfield mining industry.
In 1995 Tanzania hosted its very first multi-party election that shortly after saw the development of very attractive terms for wooing mining companies. Such attractive terms stated that corporate tax was almost at 0% with gold royalties set at 3%. External investors were only stipulated to pay US$200,000 annually. Because of these liberal (generous) requirements, Australia’s Resolute Mining Ltd was initialised, opening the first commercial gold mine, trailed by Barrick Gold and then Anglo Gold Ashanti.
In Tanzania the precious commodity namely gold makes up for over half of the country’s non-traditional trade. Even though the country is under-developed, there seems to show no indication of it being developed further. It’s my guess that world-wide investors are looking elsewhere and therefore missing an untouched mineral resource country, or assumptions might exist that the minerals have been locked up by Resolute and Barrick.
After further research I learnt that this is not the case, that Tanzania is still very much rich in minerals and other mining resources. In actual fact, perfect land in prospective districts are owned and held my local people, so if investors want to explore the prime land they have to first purchase the premises from the local or work together in the exploration and further phases. This poses many threats and challenges due to the amount of interest and people involved.
In attempt to find a resolution, in 2010 Tanzanian Government presented a revised mining policy and Mining Act. This has hardly been a solution and since then, investors have not stopped negotiations, effectively impacting owners of prospective land. The Mining Act (2010) is based on the use-it-or-lose-it stipulation which implies that prospective land owners are made to submit reports stating and proving that they are making use of the land. In order to force companies to surrender work-shy lands, the Act also stipulates a hike in rents (from $40 to $100) and handover fees.
The Mining Act embraces improvements in royalties – diamonds and unedited gemstones; 5% – uranium; 5%; gold and all metallic minerals; 4% – cut and polished gems; 1% and lastly industrial and other mineral; 3%. Times are changing as locals seek for foreign majors to create mutual joined ventures and farm-outs.