Understanding Mining Rights in Tanzania: A Comprehensive Overview

1. Prospecting Licences

A prospecting licence is the first step in the mining journey, allowing an individual or company to explore and search for minerals within a specified area. This includes the removal and excavation of soil and earth.

Prospecting licences are specific to certain groups of minerals as defined by the Tanzanian Mining Act. These groups include metallic minerals, energy minerals, gemstones (both kimberlitic and non-kimberlitic diamonds), industrial minerals, and building materials. The licence will explicitly state the group and type of minerals it covers.

Duration and Renewal:

• Initial Period: 4 years
• Renewal: 3 additional years (No further extensions allowed)
• Post-Expiry: The area reverts to the government, and any further exploration must be conducted in collaboration with a local mining company designated by the Minister, with Cabinet approval.

Conditions:

• A maximum of 20 licences can be held by one entity, covering no more than 2,000 square kilometres.
• Operations must commence within three months of the licence being granted.
• Discovery of any mineral deposit with commercial potential must be reported to the licensing authority.
• The holder must adhere to the prospecting programme and meet minimum expenditure requirements.

2. Special Mining Licences

For large-scale mining projects, where capital investment exceeds US$100 million, a special mining licence is required. This licence grants the holder exclusive rights to mine specified minerals within the designated area.

Duration and Renewal:

• Initial Period: Corresponds to the estimated life of the ore body or as requested by the licensee (whichever is shorter).
• Renewal: Applications for renewal must be submitted at least one year before the licence expires.

Conditions:

• The holder must develop the mining area and commence production in accordance with the approved mining operations and environmental management plan.
• Employment of Tanzanian citizens is required, with a succession plan for expatriate employees.
• The mining area must be properly demarcated, and mine closure plans updated regularly.
• The licence holder is also responsible for relocating, resettling, and compensating individuals within the mining area, as per the Land Act.
• The government is entitled to at least 16% non-dilutable free carried interest shares in the mining company. This percentage may increase based on the type of minerals and the level of investment.

3. Mining Licences

For operations requiring capital investment between US$100,000 and US$100 million, a mining licence is issued. This licence grants exclusive rights to mine the specified minerals within the designated area.

Duration and Renewal:

• Initial Period: Up to 10 years
• Renewal: Once, for a period not exceeding 10 years (applications for renewal must be made at least six months before expiry).

Conditions:

• The holder has the right to enter the mining area, conduct mining operations, and erect necessary equipment, plants, and buildings.
• The holder may dispose of the recovered minerals and carry out prospecting within the mining area.
• Compliance with environmental management plans and payment of royalties and taxes is mandatory.
• Relocation, resettlement, and compensation of affected persons must be handled according to the proposed plan.

4. Primary Mining Licences

Primary mining licences are designed for small-scale mining operations and are exclusively available to Tanzanian citizens or companies wholly owned by Tanzanians. This licence provides the holder with the exclusive right to prospect and mine within the designated area.

Duration and Renewal:

• Initial Period: Up to 7 years
• Renewal: The licence is renewable, typically for the same period as the initial term. The law does not specify a limit on the number of renewals.

Conditions:

• The holder has the right to erect necessary equipment, plants, and buildings for mining operations.
• Payment of royalties to the government is required, and waste disposal must be consistent with the Environmental Management Act.
• The holder is also entitled to prospect for minerals other than gemstones within the mining area.

Primary mining licences may be converted into mining licences, allowing for scalability as the operation grows. Additionally, other types of licences include dealer’s licences (for acquiring and selling minerals, including export rights) and broker’s licences (for acquiring and selling minerals, excluding export).

5. Foreign Participation and Transferability

Foreign entities are eligible for most mineral rights in Tanzania, except primary mining licences, gemstone mining licences, and broker’s licences. However, exceptions can be made under certain conditions, particularly if technical support is required that cannot be sourced locally.

Mineral rights are generally transferable, but special and mining licences require the consent of the Commission for any transfer, except in cases involving affiliates or financial institutions. The Commission will only grant consent if substantial developments have been made by the holder seeking to transfer their rights.

Also read Dentons – Mining in Tanzania