DAR ES SALAAM – Foreign-owned banks, insurance companies and law firms could be locked out of Tanzania’s mining sector as part of tough new regulations that aim to limit foreign ownership of mining-related activity.
Africa’s fourth-largest gold producer is seeking to take more of the profits from its vast mineral resources by overhauling the fiscal and regulatory regime of its mining sector.
Under new regulations the mining ministry passed last month, Tanzania will now make it compulsory for foreign-owned mining groups to offer shares to the government and local companies.
A mining ministry spokesperson said the regulations came into force in January after Tanzanian President John Magufuli ordered authorities to take action to put them into effect.
The new rules will restrict the way in which foreign-owned banks, insurance companies and law firms conduct business with mining firms, according to details of the regulations seen by Reuters.
“A contractor, sub-contractor, licensee (mining company) or other allied entity shall maintain a bank account with an indigenous Tanzanian bank and transact business through banks in the country,” according to the Mining (Local Content) Regulations of 2018.
The regulations define an “an indigenous Tanzanian bank” as a bank that has 100% Tanzanian or a majority Tanzanian shareholding.
Major foreign-owned banks operating in Tanzania, include Barclays Bank, Citi, Standard Chartered Bank , Stanbic Bankand South Africa’s First National Bank (FNB).
“The insurable risks relating to mining activity in the country shall be insured through an indigenous brokerage firm or where applicable an indigenous re-insurance broker,” the local content regulation said.
The local content rules are among up to nine separate mining regulations issued by the mining ministry last month but are yet to be publicly released.
The new rules also require “indigenous Tanzanian companies” to have at least 5% equity participation in a mining company in addition to a 16% government free carried interest under the Mining Act passed in June.
The local content regulation imposes a fine of at least $5-million for mining companies that fail to implement the new requirements.
The regulations also state that mining companies, contractors and subcontractors “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 prioritize indigenous Tanzanian companies in granting mining licenses. source: Reuters