The evolution of mining sector in Tanzania 60 years after independence

The evolution of mining sector in Tanzania 60 years after independence

AS the Tanzania Chamber of Mines (TCM), an umbrella body for the Large-Scale Miners, explorers and service providers in the sector held her 30th Annual General Meeting on 12 December 2021, just 3 days after the 60 years of Uhuru celebrations, the sector has with no doubt been through highs and lows since start nevertheless, remains an economic pillar for the Tanzanian economy.

Tanzania’s mining sector has evolved over time now, having picked up in the late 90’s when it took a growth trajectory that was higher compared to any other time in the country’s history.

The rise of the sector was a result of the then President, Benjamin Mkapa’s mining policy interventions, including for instance the Mineral Policy of Tanzania and Mining Act of 1997 and 1998 respectively.

The Mineral Policy adopted in 1997 gave way for Private Sector to take lead in exploration, mine development, mining, mineral beneficiation, and marketing.

The Government remained in the role of being a facilitator, regulator and administrator. With the formulation of the 1997 Mineral Policy the Government aimed at increasing GDP contribution from 2% to 10% by 2025.

With reference to the mining of gold, for instance, the 1997 mining policy and the 1998 Mining Act created certainty in the sector and catapulted Tanzania’s gold production from zero to number 3 net exporter of gold in Africa.

With the promulgation of the 1997 Mineral Policy and the 1998 Mining Act, Tanzanians witnessed a number of large-scale mining projects including: • 1998 Golden Pride Mine (Resolute Mining Limited) established in Nzega

• 2000 Geita Gold Mine (AnglogoldAshanti) established in Geita; (tier one project) • 2001 Bulyanhulu Gold Mine (Barrick Gold) established in Kahama

• 2002 North Mara Gold Mine (Placer Dome) established in Tarime • 2005 Tulawaka Gold Mine (Barrick Gold) established in Biharamulo

• 2009 Buzwagi Gold Mine (Barrick) established in Kahama In 2009, Tanzania came up with a new Minerals policy.

The policy had a vision of having an effective mineral sector contributing significantly to the acceleration of social-economic development through sustainable development and utilization of mineral resources in Tanzania by 2025. The focus was to ensure integration of the mining sector with other sectors of the economy.

The integration of the Mining Sector with the other sectors of the economy would definitely have a multiplier effect in the overall economy. With the same pace of growth, we would have expected to see a more robust sector.

However, the situation is slightly different, the mining sector at some point was facing a number of challenges, and like many other mining countries, the slump in the commodity prices and consumption negatively impacted the mining industry and slowed down one of the key contributors to the Tanzania’s economy.

In addition to global factors, domestic factors have also affected the growth of the once vibrant and promising sector, and these factors include issues such as, legal, fiscal and regulatory uncertainty and unpredictability of fiscal policies.

Thank God the challenges are within the ability of our regulators to resolve and as a nation we continue to enjoy a safe and secure investment environment with peace and tranquility in the country.

The Mining sector in Tanzania has definitely been through some challenges ranging from falling commodity prices to policy uncertainties.

The gold’s most pronounced price fall happened between October of 2012 and July of 2013, a nine months period during which the metal lost over a quarter of its value.

The price continued to fall to a low of $1,054 per ounce in December 2015 before rebounding. Due to some of these challenges (both market and regulatory challenges) the gold sector in Tanzania moved to number 4 in the continent, and thus reducing the chances of meeting the goals of Tanzania’s development vision 2025.

The Vision’s plan for the sector envisaged that the sector should contribute 10% towards the national GDP by 2025 from the current 2.5%.

This remains to be a bigger challenge ahead that need re strategizing and dealing with the internal challenges to be achievable.

The sixth phase Government under the stewardship of President Mama Samia Suluhu Hassan, has taken comprehensive corrective policy interventions that have started yielding positive results.

Both TCM and individual companies have overtime been engaging and working with regulators on ways to strategically get the mining sector to rejuvenate and positively contribute to the economy.

An honest discussion between the government and all stakeholders on challenges affecting the mining sector have yielded positive outcome.

Under the sixth phase government we have witnessed new mining companies being granted mining licenses a sign of good progress of the sector. The timing is now perfect for such an undertaking, as world-wide, the mining industry has experienced a positive up-turn.

Tanzania needs to immediately ride with such a positive global up-turn which, unfortunately, has a very limited window and the world has no shortage of competitive, resource rich investment destinations.

If mother Tanzania misses the boat now, it may take years before the onset of next positive wave.

In addition to its own contribution, the sector has a huge potential to unlock other areas of the economy, alleviating poverty, creating substantial employment creation as well as superseding the expectations of Vision 2025.

While Africa and the rest of the world were grappling with Covid-19 economic impact, Tanzania’s economy remained resilient to the pandemic impact.

Even with the fall in tourism which was number one forex earner before onset of the pandemic, yet the worst hit during the first, the second and third waves of Covid-19 , Tanzania being a gold exporter is one of the few countries in East Africa that remained with sustainable fiscal space to help support economic growth.

With the favorable metal prices and the sustained exports, Tanzania economy remained robust during all the Covid-19 period.

Being a minerals exporter, Tanzania remains better positioned than many other countries in the region to respond to the Covid-19 economic crisis, given favorable commodity prices, as an oil importer and gold exporter. Foreign Direct Investments which is a key source for Capital goes where it is welcome.

With the sixth phase government, the country is now moving to being an ideal investor destination of choice, largely due to certainty in policies.

For instance, ease to secure work permits, acknowledgement of the role of the private sector in building and contributing to the economy and the Government’s readiness to engage private sector and the fight against corruption etc.

have the net effect of attracting more foreign direct investments in the country and increasing investor confidence. It is a high time we go back to the basics.

Focus on creating a conducive environment for investors, we have done it in the past and we can still do it now. Political will is needed to drive the appropriate policies.

The writer is Godvictor Lyimo, President of Tanzania Association of Accountants (TAA), reachable via godvictorl@yahoo.co.uk, Phone: 0787514014.

Sometimes just let the law take its course

YOU see, most of the time I like ...

Author: Godvictor Lyimo

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