This article continues to explore the types of licenses required in Tanzania’s mineral sector and the conditions for trading in minerals here in Tanzania. You can find the first installment of the ongoing series here[1] .
Shikana Group advises and draws up strategy to ensure that its clients obtain the required licenses they need to operate in a given sector in Africa. To know more about the company registration in Tanzania and mining in Tanzania, contact us.
Mining license
A mining license is provided for operations where the capital expenditure is between USD 100,000 and USD 100 million. It gives the holder the only right to conduct mining operations in the mining region for the minerals listed in the license. It is initially issued for a maximum of 10 years and may be reissued once for an additional 10-year period. A request for renewal must be submitted no later than six months before the license expires, along with the required fee and a tax clearance certificate from the tax authority for any operations carried out during the renewal period.
The following are some of the requirements that may be placed on the owner of a mining license:
- The right to conduct mining operations in the mining area.
- The right to construct machinery, buildings, and other structures.
- The disposal of the obtained minerals.
- To conduct prospecting inside the mining region.
- Per the environmental management strategy, stack or discard any garbage.
- To cover taxes, royalties, and other expenses.
- To put into action the suggested strategy for relocating, resettling, and compensating individuals within the mining regions, if surface rights holders are occupying those areas.
- To hire, educate, and train Tanzanian nationals while implementing a succession plan for foreign workers in compliance with labor rules.
Primary Mining licenses
With a primary mining license, one has the sole authority to conduct prospecting and mining activities inside the mining area. It has a maximum initial tenure of seven years and is extendable. The legislation is vague regarding the maximum number of times or years that a license may be renewed. But in reality, a primary mining license is typically extended for the same time frame it was initially given.
Only Tanzanian residents or businesses entirely made up of Tanzanians, have only Tanzanian directors, and have all of their employees’ influence over the business exerted from within Tanzania are eligible for this license. A mining license may be created from a primary mining license.
The following conditions may be put on the primary mining license holder:
- The authority to develop the tools, structures, and infrastructure required for extracting, transporting, dressing, or processing the minerals obtained during mining activities.
- To pay the government’s owed royalties.
- To pile or dispose of any waste material per the Environmental Management Act.
- To put into action the suggested strategy for the removal, resettlement, and payment of compensation to those within the mining regions if surface right holders are present.
- The right to prospect for any minerals or other gemstones within that mining region.
Additionally, there are licenses for brokers and dealers. A broker’s license entitles the holder to purchase and sell minerals but not export them. A dealer’s license allows the holder to purchase and sell minerals and the right to export. Only Tanzanian citizens are permitted to obtain broker licenses.
Assignment of Mining Rights
Mineral rights can be transferred. However, special and mining licenses cannot be transferred without the Commission’s permission unless transferred to an associate or a financial institution. Only when there is evidence that the holder of the mineral right seeking to transfer has made significant developments will the Commission grant consent.
Renouncement of Mining Rights
A mineral right that has already been given cannot be revoked or suspended without good reason and after being adequately awarded.
A license may be revoked or suspended for the following reasons:
- Violation of the Mining Act’s enforceable sections, rules, or license requirements.
- Refusal to follow a legitimate instruction issued under the law or regulations.
- Failure to adhere to licensing requirements may be stated in a development agreement.
However, before a license can be revoked or suspended, the Commission must send a default notice and provide the license holder at least three months to fix the issue; alternatively, if the problem cannot be fixed, the license holder must be given a chance to make a fair settlement offer.
Foreigners’ Mining Rights
Any mineral right may be awarded to foreign parties, provided they adhere to general licensing standards; primary mining licenses, gemstone mining licenses, and broker licenses are the only exceptions. Foreigners cannot be awarded a primary mining license, as was already said; nevertheless, if a primary mining license holder needs technical support to carry out operations and such support cannot be obtained within Tanzania, the holder is authorized to hire a foreigner to do so.
The Commission must approve a resident mines officer’s recommendation in advance for such an agreement. The Commission may also issue the license when a foreign national controls no more than 50% of the participating shares. It must be shown that the development of gemstone deposits in the relevant area will likely demand specialized knowledge, advanced technology, or a significant amount of expenditure for the Commission to proceed in this way.
How Shikana Group’s Legal Advice Services Can Help!
As a leading legal advice services provider in Tanzania, Shikana Group advises and draws up strategy to ensure that its clients obtain the required licenses they need to operate in a given sector in Africa.
Our legal team have extensive experience dealing with licensing applications in the tourism, gaming, mining, financial services, oil and gas, and telecommunication sectors.
For a better understanding of and legal advice on mining company registration in Tanzania and mining in Tanzania, contact the Shikana Group, and we’ll be with you every step of the way!
please hyperlink the url to the first part after it’s posted on Shikana’s website.