Investor dismisses claim that JPM will 'nationalise' mines

14Oct 2017
The Guardian Reporter
The Guardian
Investor dismisses claim that JPM will 'nationalise' mines
  • ...As the newly-established Ministry of Minerals postpones the fist-ever tanzanite auction until further notice

A FOREIGN investor company has rubbished reports that President John Magufuli's government wants to nationalise all large-scale mines in Tanzania as the country seeks a bigger share of revenues from its natural resource wealth.

 

A Toronto-headquartered investment advisory firm, DaMina Advisors, claimed in a note to investors last week that "Tanzania is edging closer and closer to a total nationalisation of the country’s mining sector."

In a note co-written by the company's global Managing Director and chief frontier markets analyst Sebastian Spio-Garbrah and the co-head of advisory services, Mark Willms, DaMina Advisors painted a rather gloomy picture of Tanzania's mining sector outlook.

"The spirit of recent laws passed by the parliament of Tanzania signals that the ongoing disputes between the government of Tanzania and foreign mining companies is moving towards nationalisation and the non-enforcement of any international arbitration awards in local Tanzanian courts," said the foreign investment advisors.

"Tanzania’s new laws are conventionally written from a prospective point of view and the retroactive wording of these laws signals that nationalisation is being planned by the government and could be imminent."

DaMina Advisors claimed that only Russian and Chinese firms would be safe from the government's mining sector crackdown.

"Foreign-owned mining companies in Tanzania have minimal options to protect their assets. Companies that want to survive will have to move quickly to have serious bilateral negotiations with the government, shelving some of their equity stakes to the state, or to large Chinese or Russian conglomerates," they claimed.

"Tanzania is not likely to tear up mining contracts involving large non-western firms from China or Russia."

However, the executive chairman of the Canadian-based Tanzanian Royalty Exploration Corporation, James Sinclair, who is known by the moniker 'Mr Gold' in some quarters, dismissed suggestions that Magufuli's government wants to take over foreign-owned mines.

Tanzanian Royalty Exploration Corporation owns a 55 per cent stake in the Buckreef Gold Mine Re-Development Project in Tanzania, with the State Mining Company Corporation (STAMICO) holding the remaining 45 per cent of the shares.

"The demands of the government of Tanzania under the leadership of President John Magufuli are clearly a call for fair and equal treatment, not nationalisation," said Sinclair. 

"To date, there has been no hint of nationalisation in President Magufuli's desire to see that the people and government of Tanzania get their fair share of the wealth from commercial activities within its borders, and for its resources."Sinclair noted that Magufuli is "a man for this time, country and continent."

"Corruption of government and business people is the cancer in society. It must all be brought to an end as expeditiously as possible. Eliminating corruption is Magufuli's agenda," he insisted.

"As a businessman operating in Tanzania for more than twenty years, it is my opinion that operating in good faith is as necessary in Tanzania as it is everywhere else. Good faith negotiations create expeditious outcomes for long term and sustainable agreements moving forward."

Tanzania, Africa's fourth-largest gold producer after South Africa, Ghana and Mali, also has vast deposits of coal, uranium and precious gemstones. 

Major foreign-owned mining companies in Tanzania include London-headquartered Acacia Mining Plc, AngloGold Ashanti and Petra Diamonds. 

Meanwhile, the government announced yesterday that it has suspended the planned maiden auction of tanzanites indefinitely."The Ministry of Minerals regrets to inform the general public that the tanzanite auction which was scheduled to be held at Mererani town in Manyara Region from 12th-15th October, 2017 has been postponed until further notice," the newly-formed ministry said in a statement.

"This auction has been postponed due to a stakeholders' request to give them enough time ... for preparations and hence increase the number of auction participants. During this period, the ministry and Manyara Region authorities will concentrate on improving necessary infrastructure to enable the auction to be conducted in a secure and conducive environment."

Magufuli last week split the Ministry of Energy and Minerals in two and appointed heads for the new ministries in a cabinet shuffle.The move comes five months after sacking the previous energy and minerals minister, Prof Sospeter Muhongo.

Two presidential committees had recommended the splitting of the ministry to tighten supervision of natural resources in Tanzania.

The president appointed Angellah Kairuki as the new mining minister. The 41-year-old lawyer by training previously served as minister of state in the president’s office responsible for public service management and good governance.

Medard Kalemani (49) was promoted from deputy energy and minerals minister to lead the new energy ministry. He has worked for the ministry for more than a decade, previously as its legal affairs director.  

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