Tanzania enters into more joint ventures with mining firms

Dar es Salaam. Government yesterday signed an agreement with four mining companies to form joint ventures (JV), a move which is meant to set the stage for Tanzanians to benefit from the country’s natural resources.

The companies born out of the JV - and which are to invest a total of Sh1.755 trillion - are Faru Graphite Corporation, Petra Diamonds Ltd (PDL), Nyati Mineral Sands Ltd and Sotta Mining Corporation Ltd.

The negotiation team’s chairman, Prof Palamagamba Kabudi, said in all companies except the PDL, the government enjoys 16 percent free-carried interest.

For PDL, Prof Kabudi said the government had agreed an issue of shares in the mine’s holding company Williamson Diamonds Ltd (WDL).

The deal with the London-listed miner will increase the government’s interest to 37 percent from 25 percent.

This suggests that deal will reduce Petra’s stake in the mine to 63 percent from 75 percent.

In addition, the two partners have agreed to an economic benefit ratio of 55 percent for the government and 45 percent for Petra.

On the other hand, the government agreed with Faru Graphite Corporation an economic benefit ratio of 52 percent for the former and 48 percent for the latter.

The inking of deals with the four companies is the latest move which defines a new level of the government’s partnership with investors, thanks to its initiatives in creating conducive business environment and negation power when it comes to issues of national interests.

Speaking at the signing ceremony event President Samia Suluhu Hassan said the signing of the agreement to form JVs is a tangible fruit of the review of minerals laws under the stewardship of the late President, Dr John Magufuli.

Tanzania had passed through major reforms in the mineral sector including the review of its policies and laws before it started to glean its benefits.

The Parliament of Tanzania, in a bid to protect the country’s natural resources and the employment opportunities for its citizens, passed a series of legislations in July 2017.

For mining companies, the 2017 Mining Laws introduced a number of new conditions on the way they did business.

The main features included a 16 percent free carried interest for the government and restrictions on the export of raw resources for beneficiation outside Tanzania.

“Our commitment is to create a ground for a win-win situation. We want Tanzanians to benefit from the country’s natural resources that we are blessed by God,” stressed the Head of State.

Further, she added, for the industry to have a meaningful contribution to the country’s economy, value addition should be done here in the country, and not otherwise.

Official data have it that the mining sector’s contribution to the Gross Domestic Product (GDP) is 6.7 percent, but President Hassan was optimistic the figure will change for the better in the near future.

“With Joint ventures that we have signed today, I am optimistic we will reach at least 10 percent by 2025,” noted the President.

“We can make it. But for this to happen, value addition to minerals in the country is inevitable.”

She directed respective authorities and all citizens to take part in the fight against smuggling of minerals out of the country by dishonest traders.

“We need to protect our economy. We need to be on alert all the time in monitoring smugglers of the country’s minerals,” she stressed.

“Respective authorities need to conduct regular patrol and anybody found smuggling minerals out of the country needs to face the full wrath of the law.”

Minerals minister Doto Biteko said: “Today (yesterday) we have written a history. Signing four joint ventures agreements at ago, is a big deal.”

He gave credits to the late President Magufuli and President Hassan for giving a much-needed back up to the mining sector.

Noting that the sector was improving to a better shape, minister Biteko said since President Hassan took power in March this year, the government has issued 20,277 mining licences to investors.

“All thanks go to your excellency President for creating a friendly business environment meant to attract investors,” he noted.

CEO and Managing Director of the Australia-based Blackrock Mining Company, a parent company of the Faru Graphite Corporation John de Vries said with the just signed agreement, the stage is set for commencement of implementation of the project.

“We greatly appreciate how we have achieved alignment through negotiations between our two sides,” he noted.

Adding: “The commitment on both sides to arrive at an agreement that is truly a win-win gives us a reason to express our sincere gratitude.”

He appreciated the Tanzanian government’s basic philosophy on the exploitation of its natural resources; that first and foremost such exploitation should be for the benefit of the people of Tanzania.

In monetary terms, Mr De Vries said, Black Rock’s current estimates of the expected benefits directly flowing to the government from development of the Faru Mahenge Project are near $3.6 billion.