THE government is ready to work with local and foreign investors in the extractive sector for mutual benefit and winwin cooperation, the Minister for International Affairs and East African Cooperation Prof Palamagamba Kabudi has said.
Speaking at the opening of the African Peer Review Mechanism (APRM) meeting in Dar es Salaam yesterday he said that was the main reason for enacting new laws guiding extractive industry in the country and the ongoing renegotiation of unfavourable mining contracts.
"We are not scaring away our investor but all we need is that they pay all taxes as per the legal requirements of which we don't demand much but almost the same as what is demanded elsewhere," he said.
Tanzania enacted three pieces of legislation in 2017 that made significant changes to the legal and institutional frameworks governing oil, gas and mineral extraction as it seeks to earn more from its vast natural resources.
The new laws are the Written Laws (Miscellaneous Amendments) Act 2017 ("Amendments Act"), the Natural Wealth and Resources (Permanent Sovereignty) Act 2017 ("Sovereignty Act") and the Natural Wealth and Resources (Review and Re-Negotiation of Unconscionable Terms) Act 2017 ("Contract Review Act").
Under new regulations Tanzania will now make it compulsory for foreign-owned mining groups to offer shares to the government and local companies.
The new rules restrict the way in which foreign-owned banks, insurance companies and law firms conduct business with mining firms where a contractor, sub-contractor, licencee (mining company) or other allied entity will be required to maintain a bank account with an indigenous Tanzanian bank and transact business through banks in the country.
The new rules also require "indigenous Tanzanian companies" to have at least 5 per cent equity participation in a mining company in addition to a 16 per cent government free carried interest under the Mining Act.
The regulations also state that mining companies, contractors and sub-contractors "shall retain only the services of a Tanzanian legal practitioner or a firm of Tanzanian legal practitioners whose principal office is located in Tanzania."
They also require the government to prioritise indigenous Tanzanian companies in granting mining licences. The regulations define "an indigenous Tanzanian bank" as a bank that has 100 per cent Tanzanian or a majority Tanzanian shareholding.
The new laws and regulations have paved the way for renegotiation of mining deals that have been denying the country of its fair share from its mineral resources.
The government is currently negotiating with Barrick Gold over long-running disputes related Acacia Mining operations in Tanzania. Barrick Gold owns 63.9 per cent of shares in the Londonlisted Acacia Mining which is the largest gold mining company in Tanzania.
The African Peer Review Mechanism is a mutually agreed, self-monitoring instrument voluntarily acceded to by the Member States of the African Union (AU).
The minister said since colonial period, African continent saw its natural resources being exported at a throw away price, he said.
It was now high time to correct the mistakes and ensure the natural resources benefited the people and thereby accomplish founding president Julius Nyerere's dream of making sure that all people participate and equally benefit from the exploitation of the resources.