By Ludger Kasumuni, Businessweek Reporter
Dar es Salaam. The Dar es Salaam Stock Exchange will soon enroll the second mining firm, as companies from the foreign investors-dominated sector seek to increase local ownership to meet new criteria set by the government in the recently reviewed laws.

This trend is therefore seen by commentators as part of a survival strategy.

The new Mining Act 2010 requires foreign mining companies to have substantial local ownership. In gemstone mining local ownership must go up to 50 per cent.

However a lawyer dealing with mining issues Denis Maringo, says Richland Resources does not need to list at the stock market or even have a 50 per cent ownership to continue its mining operations in the country. This is because the law specifies that only firms starting operations after the enaction of the law would be affected. Conditions for old companies would remain the same, he said.

“The minister may also use provisions of the law that give him authority to waiver some of the conditions to allow for new foreign investments that do not have local ownership in the gemstone sector,” Mr Maringo said.

Richland Resources is taking a different path to the trading platforms of the DSE; an initial public offering (IPO). The IPO would take place in April.

African Barrick Gold (ABG), the first mining company to  list at the DSE chose to cross-list directly from the London Stock Exchange. This, together with other technical and financial realities, have made the trading of the shares of ABG difficult.

To avoid the ABG’s fate, Richland Resources, formerly Richmond Resources, has decided to  list at the DSE through an IPO to make it easier for local investors to trade shares.

“We have decided to launch an IPO so as to create new  shares. Cross-listing does not create new shares. Investors have just to wait for the share owners from the primary market to sell their shares, if they do not, then no new shares are traded.

But with an IPO there is big a opportunity for buying and selling shares by local investors,”  Farai manyemba, Richland Resources’s Finance director said.

It is still difficult to trade cross-listed shares at the DSE due to various factors including reluctance of investors at the primary stock markets to sell shares to secondary markets, exchange rate fluctuations, and the time and cost it takes for local investors to make transactions from the primary market. Out of about six firms cross-listed at the DSE only one, NMG has been able to trade.

This was because it had local shareholders, Mwananchi Communications employees, who sold shares through the DSE.

Richland Resources would list 20 per cent of its shares at the DSE.  

s decided to file an application for listing shares at DSE through IPO. He was optimistic that unlike the shares of ABG which had received decimal responses from local investors, their IPO set to begin by April this year will receive positive responses from Tanzanian investors.

“I am very optimistic that many Tanzanians will show up to buy shares giving them a unique opportunity to own tanzanite wealth in this mining company which is the second to be listed at the DSE,” he said.

The Board chairman of TanzaniteOne, Ami Mpungwe, said the company decided to change the name to Richland Resources because it has undergone structural changes to engage in broad business of mining and refining several types of gemstones.

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