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Defaulters risk losing lucrative minerals rights

4th March 2012
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As ordinary Tanzanians cry for ‘a piece of cake’ in the lucrative mining industry, which in the past decade has attracted foreign direct investment of about $6billion (Sh11 trillion) mainly in gold, diamond, uranium and tanzanite, where an estimated 888 local investors line up as defaulters to renewing their minerals prospecting or mining licenses issued by the government.

As a result, these local investors, a majority of them from Dar es Salaam, risk losing their minerals prospecting and other rights, if they don’t settle pending license fees within thirty days, according to a notice issued this week to holders of minerals prospecting rights, by the Ministry of Minerals and Energy.

On the list published in detail by The Guardian on Sunday (See page 15-24) some minerals prospecting rights holders have more than 10 licenses but have failed to develop them let alone paying their annual fees as stipulated by the Mining Act of 2010.

This is a big blow to the country, which has just changed its laws to allow wider participation of locals in the lucrative mining industry, where gold exports alone during the past three years reached $4.55 billion (Sh7.2 trillion), according to a report released by Tanzania Minerals Auditing Agency (TMAA).

Ironically almost 90 percent of the defaulters are based in Dar es Salaam, according to the list issued by the Commissioner for Minerals.

“Failure thereof, the Licensing Authority will cancel the license as per conditions set out in the Mining Act of 2010,” reads part of the notice signed by the Commissioner for Minerals.

During the past decade, critics of the mining sector have been attacking the government for failing to create an attractive environment to enable local participation in the lucrative minerals sector.

According to critics, while Tanzania has been successful in attracting investments, the minerals sector has continued to face challenges. For instance, the sector’s rapid growth, particularly in large scale mining, swiftly overstretched the Government’s institutional capacity.

Existing institutions lack of adequate tools, expertise and the organizational setup required to oversee and support a modern, market-driven minerals sector.

Other challenges of the sector include low integration with other sectors of the economy, low contribution to GDP compared to sector growth, slow development of small scale mining, low capacity of the government to administer the sector. It also faces low level of value addition to minerals, environmental degradation, and a lack of diversification of minerals from gold and gemstones into base metals and other minerals.

But, with the new Mining Act, it is expected that all these challenges will be addressed to allow the country to benefit from the multibillion dollar industry.

However, with the list published today, it seems Tanzanians have been participating in the minerals sector during the past decade, with some of them being the ones who sold their mineral rights to foreign investors at throw away prices.

After selling their rights, these locals turned critics of the sector, when they realised that what they sold was worth more than what they previously thought.

SOURCE: GUARDIAN ON SUNDAY
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