14209972-tanzania-territory-with-flag-on-map-of-globeDid you know that Tanzania is the only producer of Tanzanite and is the world’s 4th largest gold producer? In 1995 the nation held its first multi-party election which led to legislations relevant for mining companies, ultimately enticing external investors under very attractive terms.  Plus minus 10 years ago the East African nation was considered a benchmark for countries observing ways to successfully build a greenfield mining industry. Tanzania held its first multi-party election in 1995 and soon after started courting mining companies under very attractive terms.

There is little indication signifying another phase of major development and thus the country remains moderately under-explored. Impending investors possibly assume that first investors have exhausted all prospective land; however this is definitely not the case.

The new Mining Act, which was created 3 years ago, is strict on the use-it-or-lose-it requirement; owners of land are obligated to file reports to prove that they are using it. To force businesses to surrender idle lands, the Act also instructs a hike in rents (from $40 to $100) and transfer fees.

New opportunities are ascending out of the rough requirements; locals are now looking for foreign companies to establish joint ventures and farm-outs. What is needed is for external explorers to partner with large-scale acreage holders who are ready to present their acreage as equity in mining projects.

tanzanite

The new mining policy includes an increase in royalties as follows; diamond and uncut gemstones (5%), uranium (5%), gold and all metallic minerals (4%), gems (cut and polished – 1%) and 3% for industrial and other minerals.

As the country seeks new investment to drive the sector forward, it also has to grapple with structural challenges in the operating environment. A shortage in supply and cost of power is a critical challenge that country faces. The lack of mining infrastructure is holding back projects, while the insecurity in remote locations where deposits tend to be located is troubling.

There are efforts being made to mitigate the problems within Tanzania. An example of this is the restoration of the central railway line, use of gas and coal to provide dependable power, and fixing the relationships between mining companies and the surrounding environments.

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