Laws Applicable:

The Mining Act, Cap 123 RE 2019

The Mining (Local Content) Regulations, 2018
The Mining (Local Content) (Amendments) Regulations, 2019
The Mining (Mineral Rights) (Amendments) Regulations, 2019
The Mining (Mineral Rights) (Amendments) Regulations, 2020
Regulatory bodies:
Environmental Management Council
Mining Commission
The Licensing Authority is the Mining Commission an Institution under the Ministry of Minerals
established through the written laws (Miscellaneous Amendments) Act, No. 7 of 2017. Whereas
among of its function is to regulate the mining activities such as exploration, mining, processing,
mineral trading and issuance of different mineral rights and permits in accordance with the
Mining Act, Cap.123 and its regulations thereto.
The mineral rights issued by Mining Commission are Prospecting Licences (PL), Special
Mining Licence (SML- Issued by Commission upon approval of the Cabinet) Mining Licence
(ML) and Primary Mining Licence (PML). Others licences include Processing Licence (PCL),
Smelting Licence (SL), Refinery Licence (RFL) and licences for dealing with minerals
(Broker’s and Dealer’s Licences).
GENERAL REQUIREMENTS:
Licences can be issued to individual, company or cooperate as per the Mining Act, Cap.123 and
its Regulations
Qualification for Individual Applicant of Mineral Rights
i. Age not less than 18;
ii. He/ She has never been bankrupt;
iii. Not a Defaulter in existing mineral right, expired or cancelled;
iv. has never been convicted within previous ten years with an offence in which dishonesty
is an element and has not been sentenced to imprisonment or to a fine not exceeding
twenty million shillings; and
v. A foreigner must have been resided within the country for at least 4 years.
Qualification for Company Applicant of Mineral Rights
i. must have postal and physical address;
ii. must be registered under the Companies Act in the country;
iii. audited financial statement must be submitted during application;
iv. Must not be in liquidation other than liquidation that forms part of scheme for
reconstruction or amalgamation of the holder;
v. Among its directors or shareholders one of the persons who would be disqualified under
the requirements of an individual applicant specifically requirements (i) to (iv).
An application must be submitted to the Mining Commission in the form prescribed under the
Mining (Mineral Rights) Regulations, 2019, which must be completed in a prescribed format.
Once the commission has received the application, it must notify the applicant within four weeks
as to whether the application has been granted. If granted, the applicant is required within a
further period of four weeks to give notice of acceptance. A further four weeks after the
applicant has confirmed acceptance, the licence will be granted by the commission.

SPECIFIC OBLIGATIONS FOR LICENCE HOLDER OF:

Prospecting Licence; A prospecting licence is required to undertake exploration activities.
There are six broad groups: metallic minerals, energy minerals, gemstones excluding kimberlitic
diamonds, kimberlitic diamonds, industrial minerals and building materials. While exploration
licences are issued in these groups, the rights attached to each licence do not vary. In addition to
the specific exploration licences, the holders of different types of licences to mine are also
allowed to conduct exploration activities in the licensed areas.

An application for a prospecting licence can be made by, and be allocated to, a body corporate or
an individual person. In addition to the general requirements provided above, the applicant must
state:

 the types of minerals and the relevant group for which a licence is sought;
 the size (and plan) of the area of land;
 a statement of available financial and technical resources;
 a statement on the procurement plan of local goods and services;
 details of licences previously allocated;
 a statement of integrity pledge; and
 a local content plan.

The local content plan must have the following sub-plans:

a. employment and training;

b. research and development;
c. technology transfer;
d. legal services and
e. Financial services.

 Payment of prescribed fee

Where there are competing applications for prospecting licence, the application which was
registered first will be given priority.

Holder of a prospecting licence enjoys:

 the exclusive right to carry on exploration activities in the licensed area for minerals to
which the licence applies;
  the right of entry to the area and the right to erect camps, temporary buildings and
installations; and
 the right to dispose of discovered gemstones, for holders of prospecting licences for
gemstones.

The obligations of a prospecting licence holder include the obligation to:

 commence operations within three months of the date of grant of the licence;
 to notify the authorities upon the discovery of a mineral deposit of potential commercial
value;
 to adhere to the prospecting programme; and
 to ensure compliance with minimum expenditure.

Mining Licence; there are several considerations, but for the purposes of grant, ownership is
determined by level of investment. Thus, capital investments of between $100,000 and $100
million are considered medium-scale mining operations and are granted mining licences.
Operations whose capital investment is at least $100 million are considered large-scale
operations and granted special mining licences.

Apart from the capital investment requirements mentioned above others include a requirement to
have 5% local equity participation – although in appropriate circumstances the minister for
minerals may vary this requirement. In addition to an integrity pledge and a local content plan,
there shall be other requirements including:

 a comprehensive statement of known mineral deposits, ore reserves and mining

conditions;
 a proposed programme for mining operations;
 an estimated recovery rate of ore and mineral products, and their proposed treatment and
disposal;
 proposed plan for resettlement, relocation and compensation if the mining operations will
take place in areas where people reside;
 the conduct of environmental studies and obtainment of an environmental impact
assessment certificate;
 a procurement plan of local goods and services;
 details of infrastructure requirements;
 a proposed plan on employment and training of Tanzanians; and
 a succession plan of expatriate employees.
 Payment of prescribed fees

General Obligations for Holders of Mineral Rights (Prospective and Mining Licences):

1. Exploration rights and mining rights are granted to any person regardless of origin,
except primary mining licences, which are reserved for citizens of Tanzania. The Mining
Commission may allow the holder of a primary mining licence to contract a foreigner
where such holder requires technical support.
 2. Mineral rights are subjected to renewal after the expiration of specific period of time,
Prospecting Licence being issued initial period of four years followed by two successive
periods of three and two years, subject to successful applications for renewal and the
application must be submitted no later than one month before the expiry date of the
licence and Mining Licence being 10 years, an application for Special Mining Licence
must be submitted no later than one year before the expiration period by using a
prescribed form. Further an application for renewal of a mining licence must be
submitted at least six months prior to its expiration by using a prescribed form, and
accompanied by a tax clearance certificate in respect of operations to be conducted
during the renewal period. The renewal period cannot exceed 10 years.
3. Mining rights are transferrable, special mining licences and mining licences are
transferable, but prior consent must be sought from the Mining Commission. Consent
will be given unless there is proof of substantial development in the licensed area. Where
the transfer is to an affiliated person or assignment to a bank, consent is not required
while Prospecting licences are transferable without prior consent. There are no
restrictions on direct or indirect transfers.
4. Abandonment of a mining right is possible under Tanzanian law. The holder of the
right must apply for a certificate of abandonment of part or all of the licensed area at least
90 days before the abandonment is to take effect. The application must:
 identify the area to be abandoned;
 state the effective date;
 provide particulars of the activities that have taken place in the area to be
abandoned; and
 provide reports and records of such operations.
Abandonment does not affect the existing liability of the licence holder.
5. There is a distinguish between mining rights and surface rights and in order to access
surface rights, the mining rights holder must obtain ministerial consent, consent from
local authorities, the landowner's consent or the consent of (other) relevant authorities.

Ministerial consent is required for the following, among others:

 areas that are dedicated for burial;

 areas where there is a military installation;
 any reserved area; and
 any protected monument.

Local authority consent and the landowner's consent are required for any inhabited area or land
for agriculture, in which case there will be compensation and relocation. Compensation,
relocation and resettlement may be required where the rights conferred cannot reasonably be
exercised without affecting the interests of a lawful occupier of land. Consent may also be
required from other authorities – for instance, in national parks, forest reserves, game reserves
and areas where there is a railway.

Where the Surface Rights are acquired, the mining rights holder has a right of entry to the
licensed area and the right to exercise its reasonably so as not to cause injury to the landowner. It
also has obligations, in appropriate cases, to seek required consent or to pay compensation and
resettle or relocate the landowner. Where the mining rights holder and the landowner co-exist
and land or other property of the landowner is damaged, the mining rights holder must pay fair
and reasonable compensation.

The landowner, on the other hand, is obligated not to erect buildings or structures without the
consent of the mining rights holder. The minister may intervene where consent is unreasonably
withheld.

6. Every mining operation requires an environmental and social impact assessment study,
followed by environmental certification for the project, before operations can commence.
In fact, a particular mining licence will not be issued unless an Environmental and Social
Impact Assessment Certificate (EIA certificate) has already been obtained. The
requirement to conduct an environmental impact study applies across the board and there
are no specific requirements based on location or type of minerals.

The operator must comply with its Environmental Management Plan (EMP), which will be
approved during the approval process of the environmental studies and issuance of the EIA
certificate. The mining rights holder is also required to undertake an annual environmental
self-audit and submit a report to the environmental management council. Further, the council
can carry out a control audit whenever it deems this necessary to monitor compliance with
the environmental parameters set for the project or to verify self-auditing reports. The control
audit is conducted to:

 confirm that the EMP is being adhered to;

 verify the adequacy of the EMP in mitigating the negative impacts of the project; and
 ensure that the criteria used for the audit are based on the EMP.

The Environmental Management Council must also direct that an environmental audit be
conducted every five years following the date on which the last environmental audit was
conducted.

Mining rights holders must prepare and submit to the chief inspector of mines a mine closure
plan for approval. The plan should address matters such as:

 programmes to reclaim and rehabilitate land and watercourses to an acceptable condition

that takes account of their previous use;
 programmes to support socio-economic activities to provide an alternative livelihood for
local communities beyond the life of the mine;
 the cost of providing statutory and other benefits to employees beyond the life of the
mine; and
 the cost of reclaiming and rehabilitating the mining area in the event that the mine is
closed.
In preparing the plan, district authorities and surrounding communities must be consulted and
their comments must be included in the plan.

A rehabilitation bond must be posted in the form of an escrow account, capital bond, insurance
guarantee bond or bank guarantee bond, as may be required by the minister.

Non compliance with the environmental obligations can result to monetary sanctions and/ or
imprisonment. For instance, the discharge of dangerous materials or pollution will incur a fine of
between TZS 3 million and TZS 50 million. In some cases, a violating party may be ordered to
pay compensation. Where a violation is committed by a body corporate, the law is such that the
directors and any other person concerned in the management of such body corporate is also
considered to have committed the offence, unless they can prove that the offence was committed
without their consent or connivance, and that they exercised all such diligence to prevent the
commission of the offence as ought to have been exercised by them having regard to the nature
of their functions in that capacity and to all other relevant circumstances.

7. The management and control of operations – including health and safety – fall within the
remit of the mine manager. In addition to ensuring compliance with the statutory
requirements, the mine manager is empowered to implement special rules regarding
health and safety.

Health and safety requirements include the obligation to:

 keep a register of employees;

 ensure that persons working in the mine are not intoxicated;
 supply safe and clean drinking water to employees; and
 provide wash and shower facilities, including underground waiting rooms and
washrooms.

The law further imposes a general obligation on every person working in a mine to take
reasonable care to ensure that the work area and equipment to be used for work are in a safe
condition, and to report anything that such person deems dangerous. The chief inspector of mines
may also impose additional requirements.

Mining accidents that result in a loss of life or serious personal injury must be reported as soon
as possible, but in any event within 16 hours of occurrence, followed by written notification in a
prescribed form within one week of occurrence. Accidents that result in a person becoming
incapacitated for a period of 14 days or loss of limb or part of limb must be reported within four
days of occurrence. Fatal accidents must also be reported to the police as soon as possible and in
any event within 24 hours of occurrence.

Other non-casualty accidents that must be notified are specified in the law and must be reported
as soon as possible, followed by written notification. They include accidents relating to winding
plants (eg, running out of winding engine, winding drum or conveyance; or failure of depth
indicator).
Generally, any non-compliance with the legislation and regulations could lead to the imposition
of different penalties, depending on the nature and severity of the non-compliance. These may
include revocation of the licence, subject to the stipulated procedure, or the imposition of
financial penalties.

Therefore it is recommended that, operators should have a health and safety policy that adopts at
least the minimum requirements that are stipulated in the relevant regulations. There should also
be a clear protocol on reporting, to ensure timely reporting of mining accidents.

The Chief Inspector of mines is appointed by and works under the Mining Commission.

8. Requirements and restrictions apply with regard to the processing or refining

(beneficiation) of the minerals, that it can be done only through a licence issued for that
purpose under the Mining (Mineral Beneficiation) Regulations of 2018. The significant
changes introduced by the changes in mining legislation in 2017 included a requirement
for raw minerals to be stored in the government minerals warehouse, from which they
may be removed for beneficiation purposes, among other reasons.
The same applies with the exportation of minerals which requires an export licence.
9. Mining operators are subject to 30% corporate income tax on their taxable profits and are
also required to withhold tax when making payments:

 in relation to dividends at 10%;

 of interest at 15%;
 of service fees provided by non-residents at 15%; and
 for local professional and consultancy services at 5%.

The value added tax rate is 18%

Mining licence holders have an obligation to pay royalties at a rate of 6% for gemstones,
diamonds, uranium and metallic minerals; and at a rate of 3% for other minerals. The calculation
of royalties is based on the ‘gross value' of minerals which is defined to mean "the market value
of minerals as determined through valuation". The process entails all won minerals to be sorted
and valued in the presence of a mine resident officer, a representative from the revenue authority
and a representative from the relevant state organ responsible for this exercise. The report made
after valuation is used to calculate the payable royalties. The government, however, retains the
right to reject a valuation on account of deep negative volatility; in such case, it may purchase
the minerals at the lowest value ascertained.

Mining operators may avail of tax incentives under two investment regimes: the Tanzania
Investment Act and the Special Economic Zones Act. These incentives may include tax holidays
for specified periods and tax exemptions. The incentives available under these regimes are
applicable to all companies, as long as they relate to investment and qualify according to the
stipulated requirements.
However, existing mining development agreements with the government may provide for
additional incentives that were available under laws which were applicable when the agreements
were entered into, but have subsequently been amended.

Strategies that mining operators might consider to mitigate their tax liabilities: Mining operators
should ensure that additional tax incentives conferred through mining development agreements
or certificates of incentives from the Tanzania Investment Centre are published in
the Government Gazette in order to legalise the same. Aside from legitimising these incentives,
the government notice helps to shield the investor's interest when dealing with the revenue
authority and mitigates the risk of the incentives becoming latent, particularly if they relate to
income tax.

Moreover there have not been significant changes to the taxation rates applicable to mining
companies in the last four years.

Moreover there are obligations laid under the Mining (Local Content) Regulations, 2018 read
together with their amendments, the Mining (Local Content) (Amendments) Regulations, 2019
(hereinafter referred to as “the Mining Local Content Amendments Regulations”) which revised
the former Regulations. Such obligations to the Mining Right holders are:

1. The Mining Local Content Amendments Regulations emphasizes for local

Tanzania companies to be given first priority in the grant of mining license. The
Mining Local Content Amendment Regulations now require that a minimum of
20% of a company’s shares must be held by Tanzanian citizens for that company
to qualify as an indigenous Tanzanian company. This has been significantly
reduced from the previous 51% minimum requirement under the Local Content
Regulations prior to the amendment.
2. Local Content performance reporting, the Regulations create a duty to Contractor
to submit an annual local content Performance Report. This is required to be done
within forty-five (45) days of the beginning of each year after commencement of
mining activities. The report must cover all its (contractor’s) projects and
activities for the year under review. The Local Content Performance Report has to
have a category of expenditures and employment achievements.
The Mining Commission is obligated to assess and review the Local Content
Performance Report to ensure compliance with these Regulations, within fifty
(50) working days after receipt of the Local Content Performance Report.
3. Use of local insurance, legal and financial services, general local content
requirements when it comes to sourcing services, contractors engaging in mining
activities are required to specifically comply with the Insurance Act of Tanzania
and shall be insured through a local insurance company.
Likewise, whenever such a contractor requires legal services in the country it is
required to retain only the services of a Tanzanian legal practitioner or a firm of
Tanzanian legal practitioners whose principal office is located in Tanzania.
The Mining Local Content Regulations require a Stakeholder wanting financial
services with respect to a mining activity to only retain the services of a
 Tanzanian financial institution or organization, unless the Mining Commission
approves the use of a foreign financial institution or organization. The Mining
Local Content Amendments Regulations have clarified the meaning of
‘Tanzanian’ and ‘foreign’ for these purposes, by reference to the definitions in
Tanzania’s main banking legislation (the Banking and Financial Institutions Act,
2006).
The Mining Local Content Regulations required a Stakeholder to also maintain a
bank account with an ‘indigenous Tanzanian bank’ which was majority Tanzanian
owned. The Mining Local Content Amendments Regulations now require
Stakeholders to maintain bank accounts with a Tanzanian bank that has at least
20% Tanzanian shareholding.
4. The Mining Local Content Regulations set deadlines for the Mining Commission
and Local Content Committee to acknowledge receipt of, review and
communicate decisions on local content plans, and the Mining Local Content
Amendments Regulations have extended these timeframes.
These amendments are likely driven by the fact that the Mining Commission and
the Local Content Committee sit periodically and comprise both full-time and
part-time members and thus lack the capacity to deal with the volume of local
content plans submitted to them.
The Mining Local Content Amendments Regulations also remove a provision in
the Mining Local Content Regulations that provided for ‘deemed’ approval of a
local content plan after fifty (50) days where the Mining Commission failed to
notify a Stakeholder of an outcome in that period of time. As a result, there is now
uncertainty regarding the repercussions if the Commission fails to act within the
prescribed timeframes to either approve or reject a local content plan.
Also the Mining Local Content Amendments Regulations has extended time for
the Mining Commission to communication its decision to the applicants from
seven (7) days to thirty (30) days.
5. Stakeholders should achieve in hiring Tanzanian citizens and for local
procurement on supplies of goods and services.
Moreover a contractor or licensee is required to submit Employment and Training
Sub-plan to the Mining Commission with respect of the mining activity. This sub-
plan shall contain the following:-
 hiring and training needs of the of the contractor;
 a specification of the skills needed;
 the anticipated skills shortage in the Tanzanian workshop;
 the specific training requirements; and
 the anticipated expenditure that will be incurred by the contractor.
The Contractor has to provide (quarterly) to the Mining Commission reports in
relation to employment and training activities, comparative analysis of the sub-
plan and actual employment and training activities to monitor compliance and the
number of Tanzanians employed during the respective quarter and their job
descriptions. If Tanzanians are not employed due to a lack of expertise, the
 Contractor shall ensure that every reasonable effort is made to provide training to
Tanzanians in that field.
A contractor shall also submit to the Mining Commission a succession plan for
any employment position that is occupied by a foreigner to make sure that the
minimum local content requirements are met.
The Mining Local Content Regulations empower the Minister of Minerals, in
consultation with the Mining Commission, to prescribe further minimum local
content levels to supplement those in the First Schedule of the Local Content
Regulations. However, the Mining Local Content Amendments Regulations add
that the Minister of Minerals should, when doing so, consult to ensure that the
views of Stakeholders have been sought.

Furthermore, filing of Returns shall be in accordance to the Laws and regulations in respect to
the Licence holder status, for instance if it is a Company it shall be in accordance to the
Companies Act, Cap 212, RE 2002 and for Non – Citizen Employment in accordance to the
Non-Citizens (Employment Regulation) Act, 2015.