Tanzanian Mining Law
The Tanzanian mining code as defined by Mining Act 1998 and updated in July 2010 is administrated by the Ministry of Energy and Minerals from Dar-es-Salaam. The current Minister is the Honourable William W. Ngeleja MP, and he in turn directs the Tanzanian Geological Survey which resides in the city of Dodoma. The Mining Act is administered by the Madini located also in Dodoma. Following trade liberalisation in 1985 the Mining Act has been modified by the National Investment Act of 1990. Property guarantees are provided for under the Multilateral Investment Guarantee Agency (MIGA) of which Tanzania is a member. The original Mining Act of 1979 was replaced by the Mining Act of 1998. The highlights of the Mining Act applicable to the Sub-Sahara Tanzanian properties are summarized below:
• Reconnaissance Licence is valid for one year and can be renewed for a period of one year. The Licence commits the title holder to a specific expenditure programme for specified mineral commodities for an area of between 50 and 150 km². This class of Licence allows an applicant to decide which part of the area merits a Mining Licence application;
• Prospecting Licence is valid for three years and can be renewed twice for a period of two years each. The Licence commits the title holder to a specific expenditure programme for specified mineral commodities for an area of between 50 and 150 km². At each renewal date the Licence holder is required to relinquish 50% of the Licence area. However typically the title holder makes a new application for the relinquished ground and historically the government has granted these new applications in preference to competitor applications. This Licence allows an applicant to decide which part of the area merits a Mining Licence application. There is no requirement for Tanzanian citizenship or registration for title holders;
• Mining Licence, delivered by the Mines Minister, is valid for 25 years or the life of the deposit which ever is shorter, and is renewable once for a period of 15 years. The Mining Licence covers all mineral substances found on the Licence with certain exceptions. An Exploration Licence may be transferred or assigned upon approval of the Licensing Authority;
• Incentives for exploration and development work include low customs duty, sales Tax and Excise Duty for a period of one year following production and then a reduced Import Duty and Sales Tax of 5 % each on imported goods used for mining operations while profit from exploitation can be freely repatriated;
• In the case of an economic discovery, the Tanzanian government has no right of equity participation in the project;
• Royalty of 4% on “netback value at the mine” for gold;
• The exploitation company can freely export all mineral products abroad and repatriate currency produced by mining operations. Provision is made for depreciation allowances of 100% on all mining capital expenditure. Withholding Tax on technical service payments for residents and non-residents will be 3% of gross payment with an escalator to 20% if such fees exceed 2% of operating costs. Withholding Tax on paid out dividends and tax upon distribution of branch profits to non-residents will be 10%.
Administration of Prospecting Licence applications are defined by the Mining Act which sets out among other regulations the Licence rental rates per square kilometre applicable to the various Licence types as follows:
• Prospecting Licence $20/km²;
• First renewal $30/km²;
• Second renewal $50/km².
Application fees are $200 and renewal fees are $100. Payment of application fees and rent may be made in either Tanzanian shillings or US dollars. Expenditure commitments are $300, $1,000, $3,000 per km² respectively in each of the initial and renewal periods. It is believed that expenditure commitments are generally not enforced on a yearly basis for specific properties as long as the Madini, i.e., the Commissioner of Minerals judges that the Licence holder is making a serious exploration effort overall. Quarterly reports are required from the title holder reporting the type and amount of exploration expenditures. Other types of Licences exist including Small Scale Operations Licences; however, these specific Licence types do not apply in the case of the PGL properties.
In the event that a PL holder has found a deposit that is potentially of commercial significance and has the potential to be developed within a period of ten years given different market or technical/operational conditions, there is provision for a five-year Retention Licence, which may be renewed for one five-year period. If the Retention Licence is granted, it is only over that part of the PL which the Minister anticipates is required to mine the deposit identified by the holder.
A Special Mining Licence ("SML") is required for mining operations. An SML is granted for a period of 25 years and can be renewed for a further 25 years. Maximum size is what is reasonably required for the operation and the application and renewal fees are US$500 and US$100 respectively. An annual rental fee of US$1,500/km² applies. SML’s convey certain surface rights. The application must be accompanied by a proposed programme for mining operations, a forecast of capital investment, the applicant’s environmental management plan, and the proposed employment and training plan. SML’s must have their perimeters surveyed.