HR and Legal Lunch and Learn Session

Who is Who in the Mining and Natural Resources Sector in Tanzania The Institutional Framework of Investment into the East African Community and How it Works

Who is Who in the Mining and Natural Resources Sector in Tanzania: The Institutional Framework of Investment into the East African Community and How it Works

Shikana Law Group is a corporate law firm in Tanzania, with a special focus in investment into the East African Community, as well as the mining and natural resources sector. Amne Suedi has been practising for fourteen (14) years, five (5) and a half of which were spent in Tanzania.

The President of the United Republic of Tanzania

The President of the United Republic of Tanzania has a key role through section 5 (a) of the Mining Act which vests the ownership and control of minerals to the President who holds this in trust of the citizens of Tanzania.

The same is reiterated under section 4 (2) and 5 (2) of the Sovereignty Act.

Previously, the minerals were vested in what I consider a loose term for the “United Republic”.

Section 5 (b) of the Mining Act grants the Government a lien over minerals.

This provision grants the President the force and legal right to protect the minerals in its control and property. This explains the actions by the President who has commissioned investigations and summoned individuals in the mining industry to the State House for queries and discussions.

Considering the current President’s efforts to fight corruption and the numerous corruption scandals associated with the mining and natural resources sector, it is sensible to concentrate such responsibility as holding the resources in trust by the President.

The President also has the power to declare an area subject to mining operations a “controlled area”. The President consults the Minister responsible for Local Government Authorities and that the controlled area is also Gazetted.

Special conditions will be prescribed to the “controlled area” and contravention of these conditions will constitute an offence.

The Minister of Minerals

Part III of the Mining Act entitled “Administration” was repealed and replaced by new provisions which specifically define the role of the Minister of Minerals, unlike the previous Act.

In terms of Section 19, the Minister is responsible for preparing policies, strategies and legislative framework for the exploration and exploitation of mineral resources, and monitoring the implementation of the same.

The Minister is responsible for monitoring all establishments and for promoting the mining and natural resources sector in Tanzania for research and exploitation.

The Minister’s powers are removed with regards to Special Mining Licenses, whereby the new Mining Commission compiles the application and submits same to the Minister responsible for presenting it to Cabinet for approval.

Furthermore, the previous section 10 of the Mining Act empowered the Minister to enter into Mining Development Agreements (MDAs), however, this has since been repealed.

The National Assembly

Commonly known as The Parliament of the United Republic of Tanzania, the National Assembly has the authority to review all mineral agreements and can also renegotiate existing or future agreements.

This authority is granted in accordance with section 12 of the Sovereignty Act and section 4 of the Contract Review Act.

Section 5 of the Contract Review Act provides that all mineral agreements are to be submitted to the National Assembly.

On 5 September 2017, this provision was heavily debated by parliament under certificate of urgency. It was suggested that the powers of the National Assembly to approve future contracts dealing with the mining and natural resources sector should be removed since powers of the National Assembly will be extended ultra vires.

It therefore follows that the Written Laws (Miscellaneous Amendments) Act No. 3 of 2017 amended section 47 (5) of the Petroleum Act which removed the power of the National Assembly to approve future Production Sharing Agreements as well as other similar agreements under the Petroleum Act.

However, the same was not made for the mineral agreements although it is understood that the intention was strongly present.

Previously, agreements entered into by the Minister were shrouded under secrecy.

Therefore, these provisions which empower the National Assembly to ensure checks and balances are met, is a positive step towards transparency and reducing certain irregularities on the industry.

Section 6 of the Sovereignty Act states that it is unlawful to make any arrangement or agreement over natural resources except where the interests of Tanzanian citizens are approved by the National Assembly and fully secure.

Mining Commission

The Mining Commission is a new institutional body created under the amended Mining Act.

In reading the Mining Act and, in particular, the interpretation clause (section 4 of the Mining Act), it appears that the Mining Commission has overtaken functions previously the responsibility of the Mining Advisory Board, the Commissioner of Minerals, the Zonal Mines Offices, and the Tanzania Minerals Audit Agency.

The Mining Commission includes the Chairman, Treasury, Ministry of Lands, Ministry of Defence, Ministry responsible for Local Governments, Attorney General, Federation of Miners Association in Tanzania, and two individuals who possess knowledge on the mining industry.

Small-scale miners and mineral dealers are excluded, as well as the Ministry of Environmental Protection and the Institution for Higher Education.

The Ministries are represented by Permanent Secretaries and the Federation of Miners is also represented by its Secretary, where the Commission’s responsibilities are enumerated under section 22 (a) to (v) of the Mining Act. The functions are extensive and broad.

The Mining Commission’s functions include the review of special mining license applications before submission to Cabinet, granting of prospecting and primary mining licenses, suspension and revocation of licenses, monitoring of the mining operations (including assessment of the quantity and quality of minerals produced), expenditure audit for tax purposes, assessment of local content performance, investment in the local economy, and the monitoring of environmental management.

The Attorney General’s Office

The Written Laws (Miscellaneous Amendments Act (No.3) 2017) provides that the Attorney General shall have the right to intervene in any suit or matter instituted by or against the Mining Commission.

This provision protects the Mining Commission in litigation matters, where the Government Proceedings Act provisions apply.

Minister of Constitutional Affairs

The gatekeeper of the Permanent Sovereignty Act, 2017 is the Minister of Constitutional Affairs.

The Written Laws Miscellaneous Amendments Act No. 3, 2017 amends section 3 of the Sovereignty Act to include ‘mineral resources’ under the definition of “natural resources”.

The Minister of Constitutional Affairs is mandated to establish regulations which prescribe the code of conduct for investment into the East African Community through the mining and natural resources sector.

The Minister also has to develop the minimum guidelines for inspection, monitoring and evaluation of investments in the mining and natural resources sector, and create regulations incidental to or conducive to the effective implementation of this Act.

The Minister of Constitutional Affairs also has the power to make regulations for the implementation of the Natural Wealth and Resources Contracts (Review and Renegotiation of Unconscionable Terms) Act, 2017.

The Judiciary of Tanzania

Typically, the jurisdiction clause in contracts governing minerals and natural resources generally provided for foreign international arbitration in the event of dispute resolution.

Section 11 (2) of the Sovereignty Act formally provides that for disputes arising from extraction, exploitation or acquisition and use of natural wealth and resources will be adjudicated by judicial bodies or other organs established in the United Republic and in accordance with laws of Tanzania.

Section 11 (3) of the Sovereignty Act provides further that all contractual arrangements should include such provision regarding dispute resolution.

Commissioner for Minerals

Previously, the Commissioner for Minerals had extensive powers to administer the Mining Act. However, section 20 of the new Mining Act reduces the functions of the Commissioner for Minerals to advising the Minister of Minerals on matters related to the mining sectors.

In practice, the Minister delegates the duty of foreseeing policy implementation to the Commissioner for Minerals, as well as the role for promotion.

Mines Resident Officers

The Mines Resident Officers are responsible for the day to day monitoring and reporting of mining activities at mining sites and they are to be stationed at every mining site.

The Mines Resident Officers are tasked with verifying records, information and production reports kept by the holder of mineral rights. Furthermore, Mines Resident Officers have oversight over the mineral storage facility at the mine and the mineral transportation to the Government Minerals Warehouse (section 27 of the Mining Act).

Geological Survey of Tanzania

Section 27A establishes the Geological Survey of Tanzania (the “GST”), which is responsible for all matters related to geological activities other than prospecting, exploration and mining activities.

In particular, the GST shall:
(a) advise the Minister on geological matters;
(b) undertake the geological mapping of Tanzania through engaging contractors; and
(c) provide data concerning the geology and mineral resources of Tanzania, and generally assist members of the public seeking information concerning geological matters.

Section 27A has other extensive responsibilities such as promoting investment in the mining sector through the use of data, and acquiring Geo-scientific data and information that will assist the Minister of Minerals in making its decisions.

The GST has the responsibility of establishing the National Mineral Resources Data Bank. Mining data is extensively regulated whereby the Mining Act explicitly states that the mineral data generated by the Mining Act, whether it is from the GST or the mining operators, is owned by the government (section 27F (2) of the Mining Act).

Furthermore, the data which is submitted by the mineral rights holder is given free of charge to the GST (section 27F (4) of the Mining Act). However, the Mining Act provides that the GST may allow the mineral right holders to market the use of data “on terms to be agreed” (section 27F (5) of the Mining Act).

Seeing as mining data makes up the value of the project, it is difficult to see how mineral right holders can be comfortable with such an arrangement.

A major change in the new Mining Act is the question of Indemnity. Previously, all officers discharging duties under the Mining Act were exempt from liability. The new law provides that all officers are liable. This is encouraging and aligns with the Government’s fight against corruption.

Shikana Law Group is a corporate law firm in Tanzania which deals with the ins and outs of investment in the East African Community, as well as the mining and natural resources sector. For more information on our services, contact Shikana Law Group today.

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