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Tanzania’s extractive sector reaps from reforms

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BEATRICE MATERU

By BEATRICE MATERU
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Tanzania’s extractive industry turned around its fortunes in 2019 as the country embarked on reforms to boost revenue collection.

For a start, Tanzania relaxed the Mining Sector Regulations 2018, which required local companies to own a controlling stake in multinationals.

Then, the government set up mineral trading hubs across the country with an eye on roping in small-scale miners, brokers and dealers. These centres were to provide more transparency in the country’s mining industry, and stop mineral smuggling and tax evasion.

Currently, there are 28 trading hubs in the mineral-rich areas of Arusha, Chunya, Dar es Salaam, Dodoma, Geita, Iringa, Kahama, Katavi, Kigoma, Manyara, Mara, Mbeya, Mwanza, Namanga, Ruvuma, Sekenke, Shinyanga, Singida, Songwe, Tabora and Tanga.

Previously all data and focus was on companies like Acacia, which recently was bought by Barrick Gold and its three mines at Bulyanhulu, Buzwagi and North Mara, the Geita Gold Mine and Williamson Diamonds. Artisanal and small scale miners were ignored.

With time, all information on small-scale and middle-scale miners are being obtained at the trading hubs and makes it easier for miners to conduct business with banks, retailers, brokers, jewellers and other traders in a regulated environment.

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Bank of Tanzania’s Monthly Economic Review shows gold export in particular, sharply raised by 48.3 per cent to $2.087 billion in October 2019 $1.407 billion collected in October 2018.

According to the central bank, the increase came from an increase in volume, “which is partly related to government measures to strengthen supervision of mining activities in the country.”

Acacia Mining, which had a rough time operating in the country, was acquired by Canadian Barrick Gold Corp.

The deal saw the Canadian firm return fully to the Tanzanian scene almost five years since it handed over operations and management of its Buzwagi, Bulyanhulu and North Mara mines to Acacia.

Despite the reforms, the government can still reap more from the mining sector.

The first gold smelter is under construction ready to take off early January 2020, and the operation of the new joint mining firm, Twiga Minerals Corporation is in the pipeline.

The gold refinery is expected to have a production capacity of minimum 40 kilogrammes of refined gold per day, processed from almost one tonne of gold ore, according to.

Analysts, however, are questioning what the two-year battle has yielded for Tanzania apart from a free carried shareholding of 16 per cent in each of the mines that Dar acquires

The new venture between Tanzania and Barrick will see the Canadian miner get pardoned of all outstanding tax and other disputes by payment of $300 million.

In addition, sharing of future economic benefits from mines will on a 50-50 basis with the government. The government will receive its half of the economic benefits from taxes, royalties, clearing fees and participation in all-cash distributions made by the mines and Twiga.

Tanzania has been described as a sleeping economic giant because of its vast deposits of gold, tin, nickel, iron, copper, zinc, lead, diamonds and uranium; tanzanite, coal and industrial minerals such as soda, kaolin, gypsum, and phosphate.

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Tanzania said early this year it was benefiting from mining sector reforms, which Dar es Salaam says have seen the sector’s contribution to GDP in 2018/19 increase to 5 per cent, up from 4.8 per cent the previous year.

In the 2019/20 financial year, the government targets Tsh470.9 billion ($205.5 million) in revenue from minerals, compared with a projected income of Tsh310.6 billion ($134.5 million) in the fiscal year ending June 30.

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