Mining players shower praise on latest joint venture deals

Dar es Salaam. Stakeholders yesterday commended Monday’s move by the government to sign an agreement with four mining companies to form joint ventures (JV), saying the move was an indication of a restoration of investors’ confidence in the sector.

The companies born out of the JV and set to invest a total of Sh1.755 trillion are Faru Graphite Corporation, Petra Diamonds Ltd (PDL), Nyati Mineral Sands Ltd and Sotta Mining Corporation Ltd.

Those who spoke to The Citizen yesterday said the friendly business environments in the mining sector would attract more investors. 

However, they said if the agreements were to work as per expectation, it was high time the government took it seriously when it came to walking the talk on the same.

“What we witnessed yesterday (Monday) is a revolutionary step in the mining sector. I hope we will be serious in the implementation process,” Prof Abel Kinyondo of the University of Dar es Salaam’s school of economics told this paper.

He cautioned Tanzania not to fall into the trap of many African countries, which are renowned for their failure to enforce their impressive laws, policies and regulations.

“Now that we have entered agreements with a subsidiary, and not parent companies as it used to be, is a big win to us,’ noted Dr Kinyondo.

“It will avoid mispricing because we can now easily control our resources.”

The Tanzania Chamber of Mines chairman, Mr Philbert Rweyemamu, said signing joint ventures and issuing of mining licence is providing a positive indicator in the mining sector and would bolster investment. 

However, he said for the country to enjoy quick benefits, the process of permit issuance should be as quick as possible so that investors could adjust business plans and start production immediately.

“Again, we need to streamline production for the supervision to be as fast and reactive as possible,” stressed Mr Rweyamamu.

Federation of Miners Associations of Tanzania (Femata) president John Bina applauded President Samia Suluhu Hassan, Minerals minister Doto Biteko and Prof Palamagamba Kabudi, who was the negotiator in the agreements for their political will in making it happen.

However, Mr Bina said, if Tanzania was to benefit, it needed to enhance transparency in the implementation process and production for the government to know the exact operational costs and avoid cheating from investors. The inking of framework to agreements with PDL saw the two partners agree to an economic benefit ratio of 55 percent for the government and 45 percent for Petra.

On the other hand, the government agreed with the graphite developer, Faru Graphite Corporation, an economic benefit ratio of 52 percent for the former and 48 percent for the latter.

The economic value is in the form of employment, payments to the government, employees and suppliers, dividends, taxes, royalties and clearance fees.

“Our commitment to Tanzania exceeds this through the purchase of goods and services, provision of power, rail haulage and port services,” said Mr John de Vries, the managing director of the Australia-based Black Rock Mining Limited, a parent company of the Faru Graphite Corporation.

The negotiation team chairman, Prof Palamagamba Kabudi, said in all companies with the exception of PDL, the government would enjoy 16 percent non-dilutable shareholding in the capital of all mining companies.

For PDL, Prof Kabudi said the government had agreed an issue of shares in the mine’s holding company Williamson Diamonds Ltd (WDL).

The deal with the London-listed miner will increase the government’s interest to 37 percent from 25 percent.