Prime
‘Makinikia’ and Tanzania’s economic liberation: The untold story – 11
What you need to know:
- The Mining Act 2010 not only raised the royalty rates of minerals, but it also changed the calculation method.
Reforming the Mineral Sector became a harmonious continuous process based on the new policy and new law.
This week we continue to chronicle the processes that dominated the arena of improving the mining sector to make it more relevant and profitable to both the country and the investor.
The Mining Act 2010 not only raised the royalty rates of minerals, but it also changed the calculation method.
Therefore, according to Section 87 of the Mining Act, 2010 every authorised miner was required to pay to the Government a royalty on gross value (GV) of the minerals produced as opposed to paying royalty calculated based on the net-back-value (NBV) of the minerals produced as was required by the Mining Act 1998 that was repealed.
In accordance to the repealed Mining Act of 1998 the NBV meant; the market value of minerals at the point of export from Tanzania or in the case of consumption within Tanzania, at the point of delivery within Tanzania after removing the processing, smelting and transportation costs.
This NBV royalty calculation was not simple, unpredictable and was unable to calculate the right royalty values and it was important to change the calculation method into a simple GV based royalty.
The statutes of 2009/2010 also gave directives to develop small scale miners in the context of continuing to formalise and rationalise their activities.
The Government was committed to support small scale mining through provision of extension services and establishment of mechanisms for accessing capital.
Programs were developed and implemented to transform and upgrade small scale mining into organised and modernised mining.
One of the programs was to provide funding to ASM through the Sustainable Management of Mineral Resources Project (SMMRP), a project funded by the World Bank in 2009.
Among the components of the project was to improve the benefits of the mineral sector for Tanzania through ASM activities by providing extension services and small grants to artisanal and small-scale miners (ASM).
In this regard the World Bank provided funds to ASM miners to boost their investment. Several ASM miners were given capital to improve their mining technologies and increase yield.
The law also gave powers to the Minister responsible for mining to set aside areas exclusive for ASM mining.
Substantive area coverage were set aside for ASM activities. The Policy also required the Government to avail to ASM miners; mineral markets to ensure that ASM mineral trading is legalised to avoid black market.
The owners of Dealers Licence (DL) were required to establish mineral shops across the country where small scale miners with Primary Ming Licenses (PML) would mine minerals and trek down from the mines downtown to mineral shops to sell their products.
A Brokers Licence (BL) was also instituted and issued to only Tanzanians small mineral traders to buy minerals in the mining areas and sell to Mineral Dealers shops located in town and cities across the country.
However, this arranged proved to be ineffective as miners and traders were reluctant to follow the rules.
However, during the Fifth Phase Government the program was modified by establishing official markets in which all licences mineral dealers owning Dealers Licences were to reside and sellers would come to sell their minerals; and eventually the arrangement was successful.
Today every mining region and district own a Mineral Market and black market have been significantly been reduced and the Government receives a considerable revenue from royalty payments of ASM activities.
