Tanzania's new mining rules impose restrictions on foreign banks, insurers

21st February 2018

By: Reuters

  

Font size: - +

DAR ES SALAAM – Foreign-owned banks, insurance companies and law firms could be locked out of Tanzania's mining sector as part of tough new regulations that aim to limit foreign ownership of mining-related activity.

Africa's fourth-largest gold producer is seeking to take more of the profits from its vast mineral resources by overhauling the fiscal and regulatory regime of its mining sector.

Under new regulations the mining ministry passed last month, Tanzania will now make it compulsory for foreign-owned mining groups to offer shares to the government and local companies.

A mining ministry spokesperson said the regulations came into force in January after Tanzanian President John Magufuli ordered authorities to take action to put them into effect.

The new rules will restrict the way in which foreign-owned banks, insurance companies and law firms conduct business with mining firms, according to details of the regulations seen by Reuters.

"A contractor, sub-contractor, licensee (mining company) or other allied entity shall maintain a bank account with an indigenous Tanzanian bank and transact business through banks in the country," according to the Mining (Local Content) Regulations of 2018.

The regulations define an "an indigenous Tanzanian bank" as a bank that has 100% Tanzanian or a majority Tanzanian shareholding.

Major foreign-owned banks operating in Tanzania, include Barclays Bank, Citi, Standard Chartered Bank , Stanbic Bank and South Africa's First National Bank (FNB).

"The insurable risks relating to mining activity in the country shall be insured through an indigenous brokerage firm or where applicable an indigenous re-insurance broker," the local content regulation said.

The local content rules are among up to nine separate mining regulations issued by the mining ministry last month but are yet to be publicly released.

The new rules also require "indigenous Tanzanian companies" to have at least 5% equity participation in a mining company in addition to a 16% government free carried interest under the Mining Act passed in June.

The local content regulation imposes a fine of at least $5-million for mining companies that fail to implement the new requirements.

The regulations also state that mining companies, contractors and subcontractors "shall retain only the services of a Tanzanian legal practitioner or a firm of Tanzanian legal practitioners whose principal office is located in Tanzania."

They also require the government to prioritise indigenous Tanzanian companies in granting mining licences.

Edited by Reuters

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION