Tanzanian miners and other stakeholders are up in arms over the new fees and rents the Energy and Minerals ministry charges for mineral rights in the country.
They say the hiked fees will bar most Tanzanians from entering the sector, which plays a crucial role in the nation’s social and economic development.
Fears by local stakeholders arise from a notice on the new fees and rents, as published in Issue No. 30 Volume 93 of the Government Gazette dated July 27, 2012.
Under the new subsidiary legislation, application fees for prospecting licences (PLS) for various minerals have more than tripled from between US$50 and US$100 (80,000/- - 160,000/-) to between US$200 and US$300. Preparation fees for PLS have meanwhile also risen from US$200 to US$500.
The annual rent for PLS for most minerals has also risen drastically from US$40 to US$100 per square km of the licence area. For instance, a holder of a 400 square km prospecting licence will now have to pay rent amounting to US$40,000 each year just to maintain the licence.
If that is drastic, try the 800 per cent jump in licence retention application fees which have shot up from last year’s US$500 last year to the current US$4000. There is a less dramatic but nonetheless still significant shift relating to the application fee for special mining licences, which has risen to US$5000 from USD2000.
Mineral extraction licences now cost US$2000, twice the previous amount. Another astronomical jump relates to the transfer fee in respect of mineral rights other than primary mining licence, now standing at US$3000 from the previous US$500.
Registering any document with the Commissioner for Minerals as well as documents that need the respective minister’s approval now costs up to US$500 for each document, compared to US$200 paid prior to July 2012.
The annual rent for first renewal of a prospecting licence calls for US$150 per sq km, while the second renewal costs US$200 – compared to last year’s rates which were US$50 and US$60, respectively.
The annual retention licence rent has gone up to US$2000 from last year’s US$500, while the special mining licence now costs US$5000, up from US$2000. The mining licence for metallic minerals, gemstones and kimberlitic diamonds is meanwhile up from US$1000 to US$3000.
A small miner who pleaded strict anonymity said it was “completely unfair” for the government to increase fees so drastically all at once as opposed to preferred gradual increments.
“The Energy and Minerals ministry is well aware of the shaky financial standing of local small miners and knows very well that we will not be able to meet the new fees, but it has intentionally chosen to see our mining careers doomed,” she noted.
Miners and other mining industry stakeholders are due to attend a meeting to be organised by HakiMadini soon to discuss the new fees and come up with a united stand on the way forward.
“Although the meeting is also set to discuss other issues related to the mining industry, it will chiefly be a platform the delegates will use to come up with a common and definitive stand on the new fees and rents because it seems the government is not really keen to ensure Tanzanians possess any licences related to mineral prospecting, extraction and related business,” said the small miner.
“We do not see much evidence of the government’s readiness to see Tanzanians possessing mineral rights,” said another local small miner, vividly dejected.
“We are told that a total of 6,000 prospecting licences are to be forfeited in an area totalling 400,000 sq kms owned by local miners. When the government revokes these licenses, who can afford to buy them if not large corporations, thus leaving no room for Tanzanians?” he added.
A Tanzanian geologist who owns several prospecting licences in different regions and who also sought anonymity had this to say: “This points to lack of patriotism…that’s why such outrageously high fees and rents have been introduced Anyone genuinely interested in empower indigenous miners would not pose such regulations…”
He said it was “as curious as it is interesting” that the new regulations were made to take effect soon after the National Assembly’s marathon Budget meeting, as they knew that making them public with the House still in session would have triggered stiff opposition from Members of Parliament.
Several Tanzanian miners and economists interviewed for this report argued that the government’s decision to raise mineral rights fees and rents ran contrary to the government’s own policy of promoting Tanzanians’ participation in mining. They maintained that the best way of increasing such participation was through prospecting and exploration.
“Mineral prospecting is the foundation of the mining sector and only through prospecting will Tanzanians, by themselves or through joint ventures with foreign companies, be able to establish and own part of the mines in the country,” said one of the economists.
The local miners maintain that it is largely thanks to the natural and other resources they own foreign investors decide to flock to Tanzania.
They add thus since it is this that makes the government benefit from tax revenues and fees from their investments in mining, they don’t see the rationale for the huge hikes in mining fees and rents that only heap extra burdens on their shoulders.
“Using my own ingenuity and resources, I have managed to bring to Tanzania four investors from the US and the United Kingdom,” said the geologist, adding: “Tancan Mining Co. Ltd was brought by Mr John Shinyanga… TANZAM Mining was brought here by Mr George Kahama. So you see, it is we very ordinary Tanzanians who bring these foreign investors.
Arusha Small Miners Association chairman Hamis Lyoba described the new mining fees and rents as “a massive blow to ordinary Tanzanians dying to make mineral prospecting and related business guarantee our survival and development alongside supporting the national economy”.
He said imposing the newly announced licences and rents was “a grand mistake probably resulting from wrong advice to the government” and stood to cost the government and the nation heavily.
Lyoba, who doubles as national chairman of the Small Mine Traders, told our reporter that some local miners have vowed not to pay the new licences and rents and could only relent after they meet the Energy and Minerals minister and get satisfactory explanation on the matter.
“Some miners whose licences are expiring soon have said they with withhold future payments pending the meeting (with the minister). They feel it is unfair for the government to hike the rates unilaterally, without any consultations with us, even though the Mining Act gives the minister the mandate to do so,” he explained.
Lyoba also appealed to the government to suspend the new rates and instead focus on the collection of arrears, adding: “Many local miners have found even the previous fees and rents difficult to pay. Things will be even more difficult with respect to the new rates to the extent that many of these miners will find themselves kicked out of business.”
The Guardian is yet to get a reaction on the issue from Eliakim Maswi, Permanent Secretary in the Energy and Minerals ministry. He has not been reachable by phone with sources close to his office saying he was “away”.
Fadhili Kilewo, the ministry’s head of communication, explained when contacted that the move (hiking of mineral business fees and rents) was meant to increase government revenue.
“There is no need to panic as the move was and still is meant to increase government revenue, and not otherwise. Therefore cooperation from local miners both small and big is badly needed so that we can serve them accordingly, as we actually immensely appreciate the work they are doing,” he said.
But mining sector watchers take the stand as vindication of the argument by Tanzanian miners that the government is increasingly using the Mining Act as a fiscal tool with which to generate revenue instead of using it to regulate and promote local participation in mining though without shutting out well-intentioned and genuine foreign investors.
A database available at the Energy and Minerals ministry shows that Tanzania is one of the countries endowed with huge reserves of mineral resources classified into five groups, with metallic minerals including gold, iron ore, nickel, copper, cobalt and silver.
Subsumed under the gemstones category are the likes of diamonds, tanzanite, ruby and garnets. The other categories industrial minerals such as limestone, soda ash, gypsum, salt and phosphate; energy generating minerals such as coal and uranium; and construction minerals such as gravel, sand and dimension stones.
Tanzania has the following confirmed mineral reserves: gold (2,222 tonnes), nickel (209 million tonnes), copper (13.7 million tonnes), iron ore (103 million tonnes), diamonds (50.9 million ounces), tanzanite (12.60 million tonnes), limestone (313 million tonnes), soda ash (109 million tonnes), gypsum (3.0 million tonnes), phosphate (577.04 million tonnes), (911.0 million tonnes), and natural gas (total volumes yet to be established). Studies on uranium are continuing, with highly promising results.
The massive volumes and rich variety of these natural resources notwithstanding, it is widely believed that the minerals are benefiting the government and the nation only marginally. Foreign investors boasting much stronger financial muscles meanwhile capitalise on “weak points” in the country’s laws and therefore not only reaping windfall profits but also effectively elbowing out indigenous players.