Tanzania's mining laws could give Government increased stake in mining operators

By Dale Benton
Tanzania has just passed a mining bill that will see the Government have a significant stake in mining projects throughout the country. President Maguf...

Tanzania has just passed a mining bill that will see the Government have a significant stake in mining projects throughout the country.

President Magufuli has signed the new bill that enables the Government to, by law, have at least 16 percent stake in all mining projects.

The law will also see an increase in royalties tax, with the government receiving six percent of all gold, copper, silver and platinum exports instead of the previous four percent.

“We must benefit from our God-given minerals and that is why we must safeguard our natural resource wealth to ensure we do not end up with empty mining pits,” Magufuli told a rally in his home village in Chato district, north-western Tanzania.

The new law will also see the government have permission to tear up and renegotiate any existing contracts for natural resources, including gas and minerals.

The government has also removed the right to international arbitration.

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The news comes shortly after a similar announcement from Kenya, in which the government was exploring options to change its mining laws in order to improve a flagging industry, which had shown no growth in the last few years.

The current mining code in Kenya imposes royalty rates ranging from 1 percent of the gross sales value of industrial minerals such as gypsum and limestone, to 5 percent for gold, 8 percent for coal, 10 percent for titanium ores, niobium and rare-earth elements, and 12 percent for diamonds.

Through a overriding review of tax legislation, the Treasury is working on a new income tax act that will see issues including cross-border mineral trading placed under the spotlight.

Corporate income tax rates for mining firms operating in Kenya vary from 30 percent for companies domiciled in the East African country to 37.5 percent for non-residents.

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