Tanzania clears road for $200m investment in two mines

Dar es Salaam. The government has flashed the greenlight for two large-scale mining firms to proceed to the mineral extraction stage that would see them inject over $200 million (about Sh440 billion) in the local economy and create hundreds of jobs. One of the big mines may start operations as early as next year.

The investments by Australian firms OreCorp and Peak Resources will be the largest for Tanzania after close to a decade of virtual dormancy in the establishment of new mines.

Inline with the new mining laws, the government will take up a 16 percent stake in each of the mines.

The government recently made sweeping changes that stipulates that all new mines must allow a 16 per cent free carry shares by the government.

Basically, the minerals ministry has given the nod for the two companies to proceed with their planned investments, pending final approval by the cabinet of the special mining rights.

“We are putting the final touches to the two special mining licence applications before forwarding them to the cabinet for consideration,” the Minerals minister, Dotto Biteko, told The Citizen over the phone.

A special mining licence requires an investor to make a minimum capital injection of $100 million into a mining project.

And due to the sensitivity of special mining licences, the cabinet has the final say, unlike other types of mining licences which are issued by the Minerals Commission.

Tanzania has not issued any special mining licence for many years now. Currently, mines with active special mining licences are: North Mara, Buzwagi and Bulyanhulu gold mines, all operated by Barrick Gold, which will trade as Twiga Mining Corporation.

The two firms are part of the three that had applied for special mining licences from the government. But, according to Mr Biteko, after thorough analysis, experts at the ministry decided that the two were deserving of the licences.

“We had to advise the third company to apply for a medium licence whose investment capital ranges between $10 million and $99 million,” he said.

Once the cabinet approves, OreCorp will start mining gold at its Nyazaga gold project in Sengerema, Mwanza Region, while Peak Resources would build a Rare Earth Element mine at Ngualla in Songwe Region. Peak Resources chief development officer Lucas Stanfield was recently quoted by local media as saying that his company expects mining activities to kick off in mid-2020. He said construction of mining facilities would take 18 months.

Normally, a large scale mine creates hundreds of direct jobs and thousands of indirect jobs through suppliers of various products and services at the mine. The government would also rip from tax and other revenues as stipulated in law.