Cramped conditions: Mine workers working 1km underground at the Harmony Cooke shaft 3 mine. Picture: MARIANNE SCHWANKHART
Cramped conditions: Mine workers working 1km underground at the Harmony Cooke shaft 3 mine. Picture: MARIANNE SCHWANKHART

Dar es Salaam — Tanzania’s parliament enacted the third law this week to overhaul its natural resources industries, ignoring a lobby group’s warning that the legislation will inhibit investment.

The Written Laws Act was passed by MPs late on Tuesday, according to a statement posted on the chief government spokesman’s Twitter account. Its provisions include granting the government stakes of at least 16% in mining companies operating in the East African country, with the option to acquire up to 50%.

"The nature, scale and manner of the recent changes have spooked the mining community and poses questions around the attractiveness of Tanzania’s business environment," said Rand Merchant Bank analyst Ronak Gopaldas. "With the relationship between the mining community and government already strained, the latest bills have fuelled uncertainty and added to a growing list of investor concerns."

Tanzanian President John Magufuli is overhauling the country’s natural resources industry to ensure the government gets a greater share of revenue from its raw materials and to help finance his plan to industrialise sub-Saharan Africa’s sixth-biggest economy.

The country has transport and utilities projects worth at least $19bn in the pipeline, according to PricewaterhouseCoopers. Last month, the finance ministry said it would spend at least 1.8-trillion shillings ($807m) in the next fiscal year on projects including building a standard-gauge railway and upgrading its main port in the capital Dar es Salaam.

The Tanzania Chamber of Minerals and Energy had warned in a submission to parliament that the legislation would make Tanzania an "unattractive destination for mining investment".

The law was the third passed in two days, after the approval on Monday of acts that assert the state’s sovereignty over mineral rights and enable the government to renegotiate contracts with mining and energy firms.

"The proposed legislation is not providing sufficient rights, nor the framework shareholders and investors expect when investing in the exploration and production sector," the Oil & Gas Association of Tanzania said in a letter sent to MPs before they began debating the legislation.

In March, Magufuli banned exports of metal concentrates and ordered an audit to identify loopholes that he said result in income losses.

Two months later, the president fired mines minister Sospeter Muhongo after a probe found mineral shipments had been understated. On Tuesday, he ordered a halt to new mining permits as well as the renewal of existing ones.

Tanzania is the continent’s third-biggest gold producer, with companies including AngloGold Ashanti and Acacia Mining extracting the metal, and also produces copper, iron, zinc and diamonds.

Bloomberg

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