Please help on the salient features of the local content regulations out the

following;

1. How does it benefit local citizens and how can they access the
opportunities in mining companies,
2. What are the responsibilities of Mining companies,
3. What government institutions oversee the implementation of these
Regulations and,
4. Are there any penalties for non-adherence?

BACKGROUND

Tanzania is a host to many mineral resources, including gold, tanzanite, diamonds,

uranium, coal, and nickel. Following the increased liberalization of Tanzania’s
economy in the 1980s, the World Bank released a 1992 report criticizing local
content, recommending that foreign investors be treated the same as domestic firms,
and discouraging the use of the mining sector as a tool for employment generation.
The subsequent Mining Act of 1998 did not include any mention of local content;
however, it did offer generous value-added tax (VAT) exemptions to foreign
investors. In the 1990s, there was a rapid increase in foreign direct investment (FDI)
in mining, primarily in gold. Partially due to favourable concessions, revenues were
significantly less than expected.

In Tanzania, the mining industry is regulated by the Mining Act of 2010 and its
subsequent amendments. The country has implemented local content regulations to
promote the participation of local citizens and businesses in mining activities. The
Local content is the value added to, or created in, the economy through deliberate
utilization of Tanzanian human and material resources and services in investments
in order to stimulate the development of capabilities and to encourage Local
investments, ownership and participation. Local Content is currently becoming one
of the strategic issues in many countries which are rich in natural resources as it
stimulates broad based economic development by alleviating poverty and ensuring
sustainable economic and social outcomes. In Tanzania the Policies and Laws
governing the extractive sector have been reviewed to capture local content issues
which aim at ensuring that Tanzanians are given preference in employment and
supply of goods and services in the sector

Tanzania has an abundance of natural resources, and in recent years there has been
debate about how best to manage these resources. The focus is on understanding
how extractive industries of mining and natural gas can be harnessed to benefit
Tanzania’s development. Extractive industries are typically capital-intensive, thus
directly creating few jobs. Yet, a number of countries have managed to exploit
natural resources for industrialization and widespread wealth accumulation.
Aware of this, African governments are seeking ways to better integrate natural
resource extraction with local economies. In Tanzania and elsewhere, a key initiative
for achieving this integration is local content legislation.

A general definition of local content is the incidence of domestic inputs including

capital, labour, and intermediate product into the value chain. This encompasses
most other definitions of local content, which include specifications for local labour
involvement, purchases of local inputs and services, and local ownership of firms. In
general, local content policies represent an attempt by the government to ensure that
the benefits of a national resource are going to the country.

CURRENT LOCAL CONTENT

The government of Tanzania has taken several steps to promote the participation of
Tanzanian citizens and companies in the mining industry. One of the key measures
is the establishment of the Mining Commission, which is tasked with overseeing the
implementation of the local content policy. The Mining Commission is responsible
for approving mining licenses and ensuring compliance with the local content
regulations

This experience led to public criticism of the government’s handling of foreign

investment, and in 2010 a new mining act was passed. This 2010 Mining Act is the
primary legislation governing the mining sector and its associated local content
provisions. With regard to local content, it includes provisions to promote forward
and backward linkages, requires multinational corporations (MNCs) seeking
prospecting and mining licences to draw up a list of goods and services that could be
bought locally, and attempts to promote training and skills transfers.

In view of providing further guidance, The Mining (Local Content) Regulations,

2018 (hereinafter referred to as “the Regulations”) imposes the local content
requirements which were introduced for the first time by the Written Laws
(Miscellaneous Amendments) Act No. 7 of 2017 which amended the Mining Act,
2010.
However, on 08 February, 2019, the Ministry of Minerals published the Mining
(Local Content) (Amendments) Regulations, 2019 (hereinafter referred to as “the
Mining Local Content Amendments Regulations”) which revised the Regulations,
that are to be read together with the Mining (Local Content) Regulations 2018
In view of providing further guidance to mineral right holders in implementing the
provisions of the Mining Act, 2019 (the Act) on corporate social responsibility, on 23
June 2023, the Minister for Minerals issued the Mining (Corporate Social
Responsibility) Regulations, 2023 (the Regulations) became effective via
Government Notice No. 409 of 2023.
It’s worth noting that the Regulations are applicable to mineral right holders covered
under PART IV of the Mining (Corporate Social Responsibility) Regulations, 2023,
to wit holders of Prospecting Licences, Special Mining Licences, Mining Licences,
Primary Mining Licences, Mineral Processing Licences, and Smelting and Refining
Licences.
CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility (hereinafter CSR) is far from a new concept. Its
origins can be traced back to the year 1950, although there are some who would
place it in the 19th century by citing the practices of exemplary entrepreneurs. That
CSR may be defined as a comprehensive business model that is designed to meet the
requirements and expectations of the various said, the concept has become more
widespread and fashionable in the last decade, and it is expected to be regularised as
a key force in business in the near future.

This way, CSR may comprehensive business model that is designed to meet the
requirements and expectations of the various stakeholders in a company, as well
as to care for and preserve the environment. It can also be understood to be the
group of actions which are undertaken by an organisation in order to accept the
responsibilities resulting from the impact of its activities on society and the
environment.

CORPORATE SOCIAL RESPONSIBILITY IN MINING

The origins of mining are found in the very origins of the first human beings, who
exploited mineral resources in the earth’s soil.

During periods when civilisations needed new materials for their development,
advances were made in mining, and it can be considered an economic activity since
the remotest of times. Now, mining plays a fundamental role in modern society and
in industrial processes, as it provides raw materials and energy sources. For a
considerable time, mining consisted in exploiting a region until its natural resources
were exhausted, then moving on to exploit another region and repeating this
process.

There was an uncompromising approach to mining in these areas, meaning that

local communities, while they did view mining activities as an economic engine and
even as a way of life, also saw them as a threat to the natural surroundings,
with environmental effects on the air, water and soils. Initially, contributing
towards society in ethical terms basically resided in philanthropic actions associated
with charity.

However, the changes brought about by economic globalisation (inequalities in

incomes, the markets being opened up and greater awareness in sustainable
development issues, among others) have created a new setting, and concern for the
environmental effects arisen has increased during the last few decades.
In short, the application of CSR in mining activities must be considered as a means
of conciliation between interested parties in the mining industry, the government,
and society, while at the same being a social investment allowing for development of
the company and improving its reputation.

MAIN DISCUSSION

Local content regulations in the mining sector aim to benefit local citizens by
promoting job creation, skills development, and economic empowerment. These
regulations encourage mining companies to hire and train local citizens, use local
goods and services, and support local businesses. By doing so, it enhances
employment opportunities, develops local industries, and stimulates economic
growth within communities. Local citizens can access opportunities in mining
companies by acquiring the required skills and qualifications, actively engaging with
mining companies, and staying informed about job vacancies and procurement
opportunities through various channels such as government websites, industry
associations, and job portals.

2. MINING COMPANIES HAVE SEVERAL RESPONSIBILITIES UNDER

LOCAL CONTENT REGULATIONS. THESE MAY INCLUDE:

The Regulations require Mining companies to develop and implement programs

that promote the recruitment, training, and employment of local citizens. This
includes providing training and skills development initiatives to ensure a qualified
and competent local workforce.

The Regulations require mineral right holders, on annual basis, to prepare a credible
corporate social responsibility plan jointly agreed by the relevant local government
authorities (LGAs) of the local area in which the mining operations take place.
Further, the development projects that will be identified by the relevant of local
government authorities (LGAs) are required to be deliberated upon by the Ward
Development Committees with the involvement of the mineral right holder and then
submitted to the District/Municipal/City Council, as the case may be, for further
scrutiny and verification by October each year.

The Regulations oblige every District/Municipal/City Council with mining

operations in its area to establish Corporate Social Responsibility Experts Committee
(the Committee). The said Committee is composed of the Executive Director (who is
the Chairperson); the Planning Officer (who shall be the Secretary); the Mining
Commission Officer in the respective area; two representatives of the mineral right
holder.

Furthermore, the Regulations under Regulation 10 (a) require the Corporate Social
Responsibility Plan to take into account environmental, social, economic and cultural
activities based on local government authority priorities of host community.
Furthermore, the said plan has to be viable and capable of being implemented
within the agreed timeframe.

The Regulations further require, Mining companies may be obligated to transfer

technology and expertise to local citizens and enterprises. This facilitates the transfer
of knowledge, skills, and technologies to build local capacity and promote
sustainable development.

3. THE IMPLEMENTATION OF LOCAL CONTENT REGULATIONS IN THE

MINING SECTOR IS OVERSEEN BY VARIOUS GOVERNMENT
INSTITUTIONS, Which May Include:

The government of Tanzania has taken several steps to promote the participation of
Tanzanian citizens and companies in the mining industry. One of the key measures
is the establishment of the Mining Commission, which is tasked with overseeing the
implementation of the local content policy. The Mining Commission is responsible
for regulating and supervising mining activities in Tanzania. They ensure that
mining companies adhere to local content requirements and monitor the impact of
their operations on local communities.

The Mining (Corporate Social Responsibility) Regulations of 2023 under regulations

16 (a) require the mineral right holder should observe procurement requirements
and is at liberty to engage a contractor or any other person to undertake works as
per the plan. In the course of the implementation, the respective Councils are
entitled to oversee the execution of the projects and may inspect any contracts, bills
of quantities, or any other relevant documents.

The Regulations under regulation 17 of the same act provide that, disputes between
a mineral right holder and the respective Council should first be resolved amicably
through negotiations. If such a dispute is not resolved by negotiations, either party
may refer the said dispute to the Commission, and appeals against decisions of the
Commission lie with the Minister for Minerals.

Furthermore, the implementation of the Corporate Social Responsibility Plan (CSR

Plan) should observe the allocation of the resources at the ratio of 40% and 60% for
local areas in which the mining operations take place and the
District/Municipal/City Councils. This was provided under regulation 14 of the
Mining (Corporate Social Responsibility) Regulations, 2023

4. PENALTIES FOR NON-ADHERENCE TO LOCAL CONTENT

REGULATIONS CAN VARY AND MAY INCLUDE:
- Fines: Mining companies found to be in violation of local content regulations may
be subject to financial penalties imposed by the regulatory authorities.

- License Revocation: In extreme cases of non-compliance, mining companies may

have their licenses suspended or revoked. This can result in the cessation of mining
operations and significant financial losses.

- Legal Consequences: Non-adherence to regulations may also lead to legal action,

including lawsuits and claims filed by affected parties seeking compensation for
damages resulting from non-compliance.

Offences and penalties (Regulation 21 of the Mining (Corporate Social Responsibility)

Regulations, The Regulations make it an offence for a mineral right holder to fail to
comply with the provisions of the Regulations. The penalty for such an offence is as
provided under Section 63 of the Mining Act [Cap 123 R.E 2019], which includes
suspension or cancellation of a licence.

Generally, the specific penalties and enforcement mechanisms may differ depending
on the specific regulations and circumstances. It is important for mining companies
to remain compliant with local content regulations to avoid potential penalties and
maintain a positive relationship with local communities and regulatory authorities.