Unpacking Tanzania's mining policy

Tanzania's mining sector is experiencing a significant boost as three Australian companies, Strandline Resources, Black Rock Mining, and Orecorp, have recently signed framework agreements with the Tanzanian government for the development of mineral sands and graphite mining projects. This move aligns with Tanzania's mining legislation, which grants the government a 16% free carried interest in major mines. Economic Analyst Raphael Maganga sheds light on the impact of these agreements and the evolution of Tanzania's mining policy since its introduction in 2017. The 2017 mining legislation, spearheaded by then President John Pombe Magufuli, aimed to ensure that Tanzanians benefit from the natural resources within their country. The key provisions included the government acquiring a 16% free carried interest in mining projects, introducing a 3% royalty on project revenues, maintaining a 30% corporate tax rate for mining entities, and allowing government representation on project boards. Initially met with skepticism from foreign investors, the legislation has since led to increased transparency and investor confidence. Raphael Maganga highlights the success of the policy in boosting Tanzania's mining sector, with contributions to GDP rising from 3.5% in 2017 to 6.5% in 2021. The government aims to achieve a 10% contribution by 2025, and the surge in gold production during the COVID-19 pandemic underscored the sector's resilience. Tanzania's export earnings, driven by gold exports, outpaced tourism in 2020, showcasing the legislation's impact on economic diversification. However, challenges persist, notably in curbing illegal mining activities and ensuring revenue collection. Raphael Maganga acknowledges that an underground mining system has led to revenue losses, estimated at over $5 million in a year. Nevertheless, improved monitoring mechanisms have enhanced traceability and reduced illicit trading. The policy's benefits extend to small-scale miners, who now have access to over 50 mineral trading centers established across mining regions in Tanzania since 2017. These centers enable local miners to trade their products legally, bypassing middlemen and increasing their earnings. The success of such initiatives has seen small miners like Saniniu Laizer become billionaires, emphasizing the policy's positive impact on grassroots mining communities. Looking ahead, Raphael Maganga discusses the potential for neighboring countries to adopt similar mining policies. With Uganda and the Democratic Republic of Congo considering comparable frameworks, there is growing momentum for African nations to safeguard their natural resources for domestic benefit. By emulating Tanzania's model, countries can prioritize local ownership and revenue retention, fostering economic growth and stability. In conclusion, Tanzania's mining sector stands poised for further expansion, with ongoing negotiations and investments set to propel the industry forward. The country's proactive approach to resource management serves as a blueprint for African nations seeking to leverage their mineral wealth for sustainable development and economic empowerment.