Dar es Salaam: The new Mining Act proposed by the government has introduced a number of radical changes, but critics say the Bill is flawed and does not adequately cater for national interests. One of the proposed changes in the Bill to be tabled in Parliament today by Energy and Minerals minister William Ngeleja is higher gold royalty and the introduction of a new formula for calculating royalty based on the gross value of the minerals produced.
The Bill proposes the royalty for gold to be raised from three to four per cent. Royalties for other metallic minerals such as copper and silver will also be four per cent while the rate for uranium, gemstones and diamond is five per cent.
Another positive aspect is the provision for listing with the stock exchange, although the shareholding level of the government and the public is to be determined by the minister after consulting with holders of special mining licences.
But activists maintain that the proposed law still favours large mining firms, saying no significant changes have been made to ensure that Tanzanians benefit from the country’s mineral wealth.
'If this Bill is passed as it is, not much of the present mining scenario will change, which means the country will continue to get a pittance from its mineral wealth and the sector’s development will continue to be lopsided. Instead, it gives more powers to mining companies,' said Mr Amani Mhinda of HakiMadini.
He particularly took issue with the section stipulating, 'A special mining licence granted to an entitled applicant shall be for the estimated life of the ore body indicated in the feasibility study report, or such period as the applicant may request.'
The activists, who included members of the NGO Forum, said at a meeting called to analyse the Bill that the licence duration should be limited to a maximum of 25 years and be reviewed every five years as stated in Section 12 of the proposed law.
Mr Mhinda said the proposed Act, like the law currently in force, bestowed excessive power on the minister and the commissioner for minerals in governing the sector. He said the Bill was mainly based on the assumption that the two officials would always act in good faith, putting national interest first, 'which has not been the case in the past'.
'This proposed law should not be passed… it has many flaws, including its failure to take into consideration environmental issues…the Bill should be revisited and all stakeholders given ample time to peruse it is passed,' noted Mr Francis Kiwanga, the executive director of the Legal & Human Rights Centre.
Opposition politician Zitto Kabwe (Kigoma North-Chadema) has also faulted the Bill, saying it did not effectively address the challenges that prompted the need to amend the current law.
He told The Citizen that the major challenges were low integration of the mining and other sectors of the economy, the sector’s disproportionately low contribution to the gross domestic product (GDP) and the low capacity of the government to govern mining activities.
He, however, said raising the royalties was positive and also applauded revision of the formula for calculating them. Mr Kabwe said although the decision would not go down well with foreign investors, the move would have a desirable impact in terms of generating revenues and could government revenues from royalties.
'But the Bill does not do enough to address major challenges the mining sector in Tanzania is facing as clearly stipulated in the objectives of introducing the Bill. Amendments should be made to rectify this shortcoming before the Bill is passed,' the Kigoma North MP told The Citizen on Saturday.
'The issue of the government’s low capacity in administering the sector, which was a key issue addressed by the Bomani Committee, has not been given much weight in this Bill. Without addressing that aspect, the proposed law is not good enough.'
He said better administration of the sector would be ensured by the creation of the Minerals Authority as proposed by the committee charged with supervising mining activities. Instead of establishing the regulatory agency, the Bill proposes creation of a Mining Advisory Board, which replaces the Mining Advisory Committee in the current law, which never performed its duties.
The activists said the board was meaningless since it had no powers and its membership was not representative of all sectoral stakeholders. Apart from a representative from higher learning institutions and one representing the chamber of mines, the other five members are from the government and its chairman is a presidential appointee.
Activist Silas Olan’g of Print What You Pay Campaign - Tanzania said the board should be replaced by the Minerals Authority, which should also oversee the overall development of the mining sector and promote increased contribution of mining to the generation of wealth.
Mr Kabwe said the new law should also have made it clear that the royalties paid should not be remitted to Treasury in order to ensure real compensation for mining activities.
'Instead, as we had proposed in the Bomani Committee’s recommendations, 20 per cent of royalty should be for running the mining authority and 60 per cent should be allocated for the Mineral Development Fund, which would among other things be an investment and capacity building vehicle to ensure Tanzania benefits meaningfully from the sector in the long run,' he said.