Sh700bn investments coming
What you need to know:
Three foreign investors will inject over $300 million (about Sh700 billion) in the mining sector, the government has said, dispelling assumptions that recently enacted laws were dealing a heavy blow to investments attraction endeavors.
Dodoma. Three foreign investors will soon inject over $300 million (about Sh700 billion) into the mining sector, the government has said, dispelling fears that recently enacted laws were scaring away potential investors.
Minerals minister Doto Biteko, told Mwananchi Communications Limited (MCL) journalists in an interview last week that three companies have already applied for special mining licences that require an investor to invest a minimum of $100 million (Sh230 billion) into a project.
The revelation came barely two weeks after Foreign Affairs and East African Cooperation minister Palamagamba Kabudi told an experts’ validation meeting of the African Peer Review Mechanism (APRM) in Dar es Salaam that Tanzania was doing well in attracting investments, and that the newly adopted natural resources laws should not scare investors away.
“The International Monetary Fund and several countries are still saying that we made a mistake in enacting the two laws, saying that they are not conducive to investment, We enacted the laws to ensure a win-win situation and protect our natural resources, and not to scare investors away, as others claim,” Prof Kabudi said.
In 2017, Parliament passed bills that set the stage for sweeping changes in the exploitation of Tanzania’s natural resources and ensure that the country gets its fair share of proceeds from its natural resources.
The two laws are the Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Act, 2017 and the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017.
Parliament also passed the Written Laws (Miscellaneous Amendments) Act, 2017.
The six laws that were amended under the Written Laws Miscellaneous Amendments) Act, 2017 included the Mining Act, Cap. 123.
The government said the Mining Act Cap 123 was amended in order to address poor management of mineral concentrate exports; tax evasion and avoidance; evasion of income tax through misrepresentation of the actual price of products and services; mining companies’ cheating on operational services and poor collection of royalties. The amendments also sought to address the challenge of illegal repatriation of money accrued through mining operations; tax exemptions that were not beneficial to the nation; mining contracts that were not beneficial to Tanzania and weak management of mining areas.
The laws empower Parliament to review all arrangements and agreements (existing and prospective) made by the government regarding natural resources that are deemed to have unconscionable terms. An arrangement/agreement will be subjected to renegotiation if it is seen to deprive Tanzanians of the economic benefits derived from natural wealth and resources.
Among other factors, it will also be deemed unacceptable when it (the arrangement/agreement) empowers transnational corporations to intervene in the internal affairs of Tanzania and when it (the arrangement/agreement) subjects the State to the jurisdiction of foreign laws and forums.
According to the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017, in any arrangement or agreement for extraction, exploitation or acquisition and use of natural wealth and resources, there shall be guaranteed returns into the Tanzanian economy from the earnings accrued or derived from such extraction, exploitation or acquisition and use.
As such, it will be the government’s duty to ensure that the country obtains an equitable stake in any arrangement towards extraction, exploitation or acquisition and use of natural wealth and resources.
The proposed law bars exportation of raw resources and instead encourages establishment of value addition facilities within Tanzania.
Mr Biteko said that foreign investors were coming in “in good numbers” to exploit Tanzania’s natural resources.
“Due to the sensitivity and the size of the investment, the special licences have to be approved by the entire Cabinet. As the responsible ministry, we have done our part of processing the applications. We are now waiting for approvals which are in their final stages,” he said.
He did not specify when the investments will start coming in, noting, however, that it had taken the country 19 years to issue new special mining licences.
Similar licences are currently being held by North Mara, Buzwagi and Bulyanhulu gold mines, among others.
