Legal issues with review of mining development agreements

After independence the Government of Tanzania (the GoT) made various attempts to put in place the requisite policy and legal framework for growth of the economy. In 1967, the GoT opted for a socialist path of economic development through the Arusha Declaration on socialism and self-reliance.

The Mining Ordinance, which was a colonial law, was repealed in 1979 by the Mining Act No. 17 of 1979. The Mining Act No. 17 of 1979 promoted public enterprise and the State Mining Cooperation controlled all the mines. From 1967 to the early 1990s, Tanzania’s mineral sector was under state control and the mining sector did not attract foreign investors.

In 1986, the GoT took steps to reform the mining sector as part of the structural adjustment programme (SAP) arising from the need for liberalization, with the objective of moving the country from control economy to one led by the private sector.

Pressure from Bretton Woods institutions over SAP and the need for liberalization, from 1990s to 2000s. Over time Tanzania adapted major reforms in its investment policy including mining policy. Tanzania embarked upon an ambitious effort to conclude Mining Development Agreements (MDAs) with foreign investors and Bilateral Investment Treaties (BITs) with other countries in order to protect, promote and remove barriers to foreign investment inflows. For instance, the Bulyanhulu Gold Mine Limited MDA was signed on August 5, 1994 and the United Kingdom and Tanzania BIT was signed on January 7, 1994.

The GoT also undertook a mining sector review in 1990, which led to a Mining sector policy framework in 1994. The GoT passed its first Mining Policy in 1997. In 1998, the GoT also enacted the Mining Act 1998. The concept of MDAs was first formally introduced in the Mining Act 1998 and was further adapted by the Mining Act 2010. Most of these MDAs, were entered into before the Mining Act 1998 came into force in July 1999 and the GoT had not yet formally set out its development strategy for the sector. The effect was that today the GoT lacks capacity to regulate and monitor contracts effectively as well as revenue collection.

Based on information that is available, between 1994 and 2007, the GoT concluded six development agreements with various investors to engage in large scale mining by the end of 2007 as follows:

• Bulyanhulu Gold Mine in Kahama signed on August 5, 1994;

• Golden Pride in Nzega signed on June 25, 1997;

• Geita Gold Mine in Geita signed on June 24, 1999;

• North Mara Gold Mine in Tarime signed on June 24, 1999;

• Tulawaka in Biharamuro signed on December 29, 2003; and

• Buzwagi in Kahama signed on February 17, 2007.

The above listed companies appear as original parties to the MDAs, however a number of the rights prescribed there in have since been assigned to other companies through corporate M&A. Four of the agreements were entered into before the Mining Act 1998 came into force in July 1999. Nevertheless, agreements that were entered into prior to the enactment of the Mining Act 1998 ensured that the rights accrued by the companies would remain effective in the event that a new law were enacted repealing the Mining Act 1979.

Further, the Mining Act 1998 ensured that agreements between mineral rights holders and the government under the Mining Act 1979, would remain effective. In the case of MDAs entered into before the Mining Act 2010 came into force, the contracts were similar, with only slight differences in some areas. The Mining Act 2010 also ensured that agreements between mineral rights holders and the government under the Mining Act 1998 remain in effect. I am not aware of any MDA’s signed under the Mining Act 2010.

The gap between the sector’s financial success and its uncertain benefit to citizens’ lives has made the national role of mining highly controversial. For over a decade, many Tanzanians have believed the sector unreasonably benefits foreign mining companies. This climate of doubt has only been increased by the fact that MDAs have been withheld from public scrutiny. This resulted in calls from the public, civil society organizations and opposition political parties among other stakeholders, for GoT to renegotiate MDAs.

As a result of public outcry and pressure groups, the GoT established various reforms through different committees such as 2002- Mboma report, 2004-Dr Jonas Kipokola report, 2006-Lau Masha report, 2007-Judge Mark Bomani report leading to the Mining Policy 2009 and the Mining Act 2010, and demand for further reforms continued, escalating after the reports by Professor Mruma and Professor Osoro’s reports in 2017.

In July 2017, the GoT decided to put in place a new regulatory framework for the mining sector. The following laws were passed: the Written Laws (Miscellaneous Amendments) Act 2017, the Natural Wealth and Resources (Permanent Sovereignty) Act 2017 and the Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Act 2017. The new regulatory framework entered into force in July 2017. This new framework also affected existing MDAs.