Dar es Salaam, Tanzania — MININGREVIEW.COM — 29 April 2010 – Mining companies have rejected the new mining law in Tanzania that raises royalties on minerals and prohibits foreign companies from gemstone mining, saying it would further erode investor confidence in the country
In a joint statement issued here through the Tanzania Chamber of Minerals and Energy, investors described the legislation as "distorted," saying it would curtail future mining projects in East Africa’s second biggest economy.
“The bill will only serve to hinder further growth of the mining sector as current investors resort to curtailing existing and expansion projects, and is bound to scare potential investors who will look elsewhere to invest,” said the chamber. The Tanzania Chamber of Minerals and Energy represents the interests of international and local investors in the sector.
Mining companies said they hoped to convince the government to amend the new law before it received presidential assent, as it would have "serious repercussions" for the industry.
Tanzania is Africa’s third largest gold producer after South Africa and Ghana, but also has reserves of uranium, nickel and coal. Gold exports alone earned it US$1.076 billion (R8 billion) in 2009, up from US$932.4 million (just under R7 billion) the previous year.
The Mining Act 2010 passed by parliament on April 23 increases the royalties paid on minerals such as gold from 3% to 4 percent and requires mining companies to list on the Dar es Salaam Stock Exchange. It also says the Tanzanian government will own a stake in future mining projects and the government will no longer issue gemstone mining licences to foreign firms.
“The Bill fails to appreciate that Tanzania’s desire to become the preferred destination for mineral exploration and investments demands that it becomes significantly competitive vis-a-vis other countries in attracting FDI into the mining and all other sectors,” the chamber said.