Hard choices on mining

Sunday July 02 2017
pic mining

Nzega MP Hussein Bashe speaks in the National Assembly in Dodoma yesterday during a discussion on the three mining bills that Parliament is scheduled to debate on this coming week. PHOTO | EMMANUEL HERMAN

Dodoma. Law experts and industry players yesterday presented their views on the three natural resource bills, with new voices adding weight to the push for Tanzania to withdraw its membership from multilateral arbitration and investment guarantee bodies.

By doing so, said the co-founder and executive director of the Lawyers’ Environmental Action Team (Leat), Dr Rugemeleza Nshala, the country would be able to defend its sovereignty from institutions like the Multilateral Investment Guarantee Agency (Miga) Convention and the International Centre for Settlement of Investment Disputes (ICSID).

“To make sense out of what we want to achieve with these new laws on natural resources, we need to start the withdrawal exercise sooner than later,” he said told Members of Parliament who were collecting stakeholders’ views on three natural resource bills here yesterday.

The bills -- Written Laws (Miscellaneous Amendments) Act, 2017, the Natural Wealth and Contracts (Review and Renegotiation of Unconscionable terms) Act, 2017 and the Natural Wealth and Resources (Permanent Sovereignty) Act 2017 -- are to be approved under the Certificate of Urgency between Monday, July 3 and Wednesday, July 5.

Dr Nshala becomes the second Tanzanian to push for the country’s withdrawal from Miga and ICSID since President John Magufuli embarked on the struggle to ensure that Tanzania gets a fair share of revenues from its minerals and other natural resources.

In May, Mr Tundu Lissu, president of the Tanganyika Law Society (TLS), was quoted as making a similar proposal immediately after President Magufuli received the findings of an investigation into possible undeclared exports by mining companies to evade tax. A presidential probe committee into the mineral concentrates saga revealed that Acacia Mining declared the presence of gold, copper and silver in its mineral sand exports but did not declare other precious metals in the consignments.


“If you (referring to the President) want to do what you are doing, then you need to first understand the real situation….you need to start by withdrawing from the Miga Convention so that investors can not sue you in international courts….,” said Mr Lissu who doubles as the Member of Parliament for Singida East (Chadema).

The ICSID is an international arbitration institution established in 1965 for legal dispute resolution and conciliation between international investors. On the other hand, the Miga – which seeks to promote investment foreign direct investment (FDI) in developing countries in support of initiatives towards economic growth, poverty reduction and improvement of people’s welfare - was established in 1985 and went into effect on April 12, 1988.

According to Dr Nshala, the Miga Convention and the ICSID suggest that Tanzania’s judges are not qualified enough to handle cases involving the government and foreign investors. “If we withdraw our membership, we will not only be acting in line with the Constitution of the United Republic of Tanzania, but we will also be protecting our natural resources,” he said.

After receiving the stakeholder opinions yesterday, MPs and other interested parties reacted differently during sessions that were co-chaired by the chairman of a Parliamentary Standing Committee on Constitution and Legal Affairs, Mr Mohammed Mchengerwa and his Energy and Minerals counterpart, Mr Doto Biteko.

In his remarks, Mr Andrew Chenge (Bariadi West - CCM) said Tanzania’s sovereignty must be protected at any cost, noting, however, that there was the need to understand the reasons behind the establishment of ICSID and Miga.

According to the executive secretary for Tanzania Chamber of Minerals and Energy (TCME), Mr Gerald Mturi, the three bills may paint Tanzania in bad light in the eyes of international investors.

Presenting the chamber’s views on the new bills, he said investors would specifically be discouraged by sections that deal with ownership of mines and increase in royalties among others, as proposed in the Written Laws (Miscellaneous Amendments) Act, 2017.

Sections 9 and 10 of the bill in question propose that the government will have to own at least 16 per cent of shares in any mining firm, and that it (the government) shall acquire up to 50 per cent of the ownership, the amount of which will be determined by the total value of the tax expenditures enjoyed by the mining company.

TCME is also against a provision that raises royalties from the current four to six per cent. “We have countries with up to eight per cent interest in royalties, but we also need to understand that in those countries, the infrastructure – roads and electricity – is supportive of major investment projects,” he said.

As for incentives, he said the country needs to remember why they were created in the first place. “Geita Gold Mine for instance, has been unable to receive enough power from Tanzania Electric Supply Company Limited, and that was why it had to be given incentives so it can produce its own power…Similarly, there is also a challenge of poor roads,” he said.

It also wants the proposed law to clearly define what raw minerals are as well as the legal ways of resolving disputes between the government and investors when they occur in the process of executing their various assignments in line with the law.

TCME also believes that the proposal to empower Parliament to review all agreements made by government regarding natural resources - as provided in the Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Act, 2017 – is bad, noting that such arrangements are already taken care of through the contracts that the government and mining companies went into.