About Tanzania

Tanzania Investment
Tanzania provides one of the most attractive investment environments in Africa following its embrace of open-market economic policies starting in the mid 1990’s. Privatisation of state industries, investment incentives and a liberalised foreign exchange controls have all contributed to its success in attracting foreign investment in the last fifteen years. Given the Country’s rich endowment of mineral resources principally gold, diamonds, gemstones and more recently nickel and uranium, mining has been one of the main sectors to have benefited from Government reform and investment incentives.
Key economic factors that make mining investment attractive in Tanzania are:
• Globally competitive tax and regulatory regime for mining investors.
• Accelerated and simplified handling of investment proposals.
• Technical staff trained in various disciplines associated with mining.
• An abundant supply of labour.
• A peaceful working environment free of confrontations, ethnic strife and labour disputes.
• Well-established mining services industry
As well as favourable political and economic factors, Tanzania is a large relatively unexplored Country for a variety of mineral commodities in varied geological settings.

Recent Discoveries
• Over 800,000 kilometers of varied geological terrains with potential mineral resources.
• Ongoing exploration work resulting in discovery of resources in excess of 50 million ounces of gold, 1.5 million tonnes of nickel and 50 million carats of tanzanite.
• Recent history of production decisions by well-financed, international companies.

Geological environments available to explore
• An Archaean shield environment with a number of classical Canadian and Australian type greenstone gold lode deposits, many capped by tropically weathered enrichment zones.
• An extensive Proterozoic terrain containing lode and near surface gold deposit types, now attracting exploration attention in South America, West Africa and elsewhere.
• Potential for epithermal gold deposits in the faulted younger rocks on the coastal plain.

Ground availability and available data
• Ample inventory of unexplored mineral ground.
• A comprehensive, systematically archived data base on geoscientific information and mineral resources.

Gold has been one of the main success stories of Tanzania over the last 15 years and the Country is now the third largest gold producer in Africa after South Africa and Ghana. This has been achieved through a combination of new discoveries and further exploration of some historical prospects and mines since the mid nineties. The principal advanced prospects and operating mines are all located in northern Tanzania in the Lake Victoria Goldfiels which is now recognised as a world-class gold province.

LocationOz AuGradeStatusOperator
Geita23M~4 g/t AuActiveAnglo-Ashanti
Bulyanhulu16M~12.0 g/t Au + copperActiveBarrick
Golden Pride2.7M2.6 g/t AuActiveResolute
North Mara5.1M2.4 g/t AuActiveBarrick
Tulawaka0.6M6.1 g/t AuActiveBarrick
Golden Ridge1.6M1.4 g/t AuFeasibilityBarrick
Buswagi4.1M1.4 g/t AuActiveBarrick
Nyanzaga4.1M1.3 g/t AuFeasibilityBarrick / Indago Res

Mining Sector - Government policy and operation

Government policy on mineral Exploration and mining in Tanzania is outlined in the policy document Mineral Policy of Tanzania (1997) and governed by the Mining Act (1998) and associated regulations. Specific provisions relating to the mining industry are also contained in the Fiscal Laws Act (1997) and the Tanzanian Investment Act 1997. More recent legislation such as the Income Tax Act (2004) and the Environmental Management Act (2004) also contain sections relevant to mining sector activity.

The Mineral Policy of Tanzania (1997) stresses the role of private led mineral development while acknowledging the role of Government as being in regulating, promoting and facilitating this activity. The Mining Act sets out the legal and regulatory framework by which companies and individuals can obtain mineral rights, conduct exploration activity and develop mines. The salient points of the Mining Act in regard to mineral right tenure are:

• Definition of mineral rights to include Prospecting Licences, Retention Licences, Special Mining Licences, Mining Licences, Gemstone Mining Licence, Primary Prospecting Licences and Primary Mining Licences to accommodate exploration and mining activity by all participants from small scale artisanal miners to large companies.

• Mineral rights allocated on a first come first served basis with transparent procedures for allocation, transfer and termination. Security of tenure is guaranteed with seamless transition from exploration mineral rights to mining mineral rights contingent on preparation of feasibility study and meeting environmental regulations. Termination of a mineral right may only be for reason of default and the licencee is entitled to specific notice of an intention to terminate with a period allowed to rectify the default before termination is implemented.

The Fiscal Laws Act (1997) and the Tanzanian Investment Act (1997) sets out the fiscal and tax regime that applies to the exploration and mining industry in Tanzania. The main provisions applicable to both domestic and foreign exploration and mining companies are:

• Corporate tax rate of 30%
• Mining royalties of 3% for gold and 5% for diamonds levied on netback value i.e. net sales revenue
• Exemption of import duty and valued added tax (VAT) on equipment and essential materials up to the first anniversary of the start of production; thereafter a 5% cap on these taxes applies
• Depreciation allowances of 100% on capital expenditure
• No restrictions on repatriation of profits from mining operations
• *Non-mandatory Government participation (*refer recent development below)

The Tanzanian Investment Centre which was created as part of the Tanzanian Investment Act (1997) provides a one stop centre to promote, coordinate and facilitate in-ward investment (including mining related investment). Investments are now guaranteed against nationalisation and expropriation. Tanzania also has a liberal foreign exchange regime with availability of foreign exchange at market prices and no restrictions on opening of domestic foreign currency accounts for non-Tanzanian companies.

Recent Developments

A new Mineral Policy was implemented during 2009 to replace the 1997 version. This Policy, whilst containing many of the same objectives as its predecessor seeks to redress the perceived low contribution of the mining sector to the country’s GDP which has increased from 1.4% in 2001 to just 2.7% in 2007 (at 2001 prices). During the same period investment in the mining sector increased from US$1.3 billion to US$2.5 billion, the value of mineral exports increased from US$26.66 million to US$1,003.21 million, employment in large scale mines increased from 1,700 to 13,000 workers and Government revenue from large scale mining increased from US$2 million to US$78 million (Source: Mineral Policy of Tanzania, September 2009 –Government publication). These increases coincided with the development of six large operating gold mines in the country during the period.

The new Mineral Policy objectives are therefore predominantly concerned with promoting economic integration between the mineral sector and other sectors of the economy, so as to maximize the contribution of the mineral sector to the economy. Other objectives include a strengthening of the legal and regulatory framework for the mineral sector to enhance the capacity for monitoring and enforcement, promotion and facilitation of mining related value added activities to increase income and employment opportunities and strategic participation by the Government in viable mining projects .

The Mining Act and associated fiscal and tax regulations are currently being reviewed by the Government with a view to amend them to give support to the new mining policy. Whilst no new legislation has yet been enacted, there are proposals that the Government should have a 10% free carried interest in mining projects as well as having the option to take a contributing equity participation of up to 20% in selected strategic mining projects. The details of these and other less contentious amendments to mining sector legislation in Tanzania will most likely emerge during 2010.

Holding of mineral rights by foreign companies in Tanzania

Typically, foreign mineral exploration companies hold their mineral rights as Prospecting Licences (PLs) which have been granted to them by the Ministry of Energy and Minerals (The Ministry) under the terms of the Mining Act or indirectly through joint venture or option agreements with local companies and individuals who already hold the PLs. PLs have a maximum area of 200 square kilometres and are valid for a period of seven years during which time they have to be renewed after three years and again after 5 years There is a requirement to relinquish 50% of the PL area at each renewal. Annual rents are payable at a rate of US$20 per square kilometre. Minimum exploration expenditure requirements progress from US$300 per square kilometre during the initial 3 year grant period to US$1,000 per square kilometre during the 1st renewal period to US$3,000 during the second renewal period. To accommodate evaluation of larger areas of ground, a PL may be applied for and granted as a PL with reconnaissance period (PLR). PLRs may be up to 5,000 square kilometres in area and are granted for an initial two year period. Following this period, one or more PLs of maximum area 200 square kilometres each may be excised from the area and retained under the conditions for a PL outlined above i.e. 7 year life with two periods of renewal. The Ministry is obliged to renew PLRs (i.e. re-issue as one or more PLs) and PLs unless a default notice has been issued to the licencee and the default has not been rectified within the appropriate time.

Prospecting Licences can be seamlessly converted to  Mining Licences following production of a positive feasibility study for commercial production of a commodity and contingent on the holder meeting other criteria e.g. implementation of appropriate environmental impact studies. Mining Licences are issued for a period of 10 years or "life of mine" whichever is shorter. Should the result of a feasibility study indicate that a mineral deposit is not commercial under current conditions, a PL can be converted to a Retention Licence which has a period of 5 years thus allowing the deposit to be retained pending improvement in economic conditions or implementation of a new feasibility study.

Other Mineral Rights

Mining Licences and Gemstone Mining Licences are commodity specific mineral rights. Mining Licences are typically issued for extracting building materials only while Gemstone Licences are issued for extraction of gemstones only. Issue of Primary Prospecting Licences and Primary Mining Licences is confined to Tanzanian nationals and have been created to accommodate the small scale artisanal mining communities that are found throughout the gold mining areas of the Country. These primary mineral rights which cover maximum areas of 10 hectares take precedence over subsequently issued PLs and access to these areas for exploration is by private arrangement with the holders.