YAKOBE CHIWAMBO
EXPERTS have praised the share-holding agreement under which the State
Mining Corporation (StaMiCo) acquires a 45 per cent stake in a new
mining venture, while a private sector firm, Tanzania-American
International Development Corporation (Tanzam-2000), controls the
majority 55 per cent shareholding.
Formally known as ‘Joint Venture Agreement for the Redevelopment of
Buckreef Goldmine,’ the deal involves Tanzam-2000 as the
locally-incorporated subsidiary company of the Tanzania Royalty
Exploration Corporation.
Experts who spoke to Business Times in separate, exclusive interviews
all said that this is the way Tanzania should go henceforth if the
contribution of the mining sector to the economy is to be adequately
felt.
They all to a man said that Tanzania can benefit very much more if
companies that will be investing in the country enter into joint
ventures with Tanzanians and/or Tanzanian entities – and make their
daily activities more transparent as a matter of course.
The general sentiment is that some of the proceeds in joint venture
activities will remain in the country instead of all of them being
sent out of the country by investors outside the ambit of
joint-venture shareholding.
“We would advise the Government to do what has been done in the
StaMiCo/Tanzam-2000 mining contract in the future, whereby Tanzania
stands a greater chance of benefiting from the nation’s resources via
the joint venture method,” said Prof. Humphrey Moshi of the University
of Dar es Salaam.
As a matter of principle, Economics Prof. Moshi applauded the
Government for starting to implement the 2010 Mining Act. This is a
good sign, starting with the StaMiCo-Tanzam venture, he said, adding
that the Government should do the same with other companies seeking to
invest in the mining sector in particular.
He also called upon the Government not to hesitate to review and take
the requisite measures seeking to bring around companies which are
operating in the country, and in which no Tanzanian institution is
involved. The overall objective should be to strike a win-win
situation for both the miners and the natural owners of the resources
at large, Tanzanians.
“It was being done in Latin America countries where, after enacting a
new law, investors were asked to abide by the new law or leave the
country” Professor Moshi says.
“Tanzania can do the same if there is such provision in the
law… even the investors know that there is something
wrong with the contracts they signed,” the don underlined.
However, he counseled law experts to look at the legislation before
taking measures against the foreign companies involved.
“This is a delicate issue, and any mistake can have a very negative
impact on the country’s economy and image as far as investments are
concerned,” the professor cautioned, stressing that nobody would blame
the Government for such a move, as the intention is noble: to ensure
that mining benefits the nation.
Foreign companies not wishing to form joint ventures with local
entities keep all their money abroad, leaving Tanzania high and dry
despite the country being phenomenally endowed with mineral reserves!
Commenting on the matter, the director of Policy & Research at the
Confederation of Tanzania Industries (CTI), Hussein Kamote, said the
contract that StaMiCo-Tanzam 2000 contract is the country’s best ever
and, hence, there is a real need for the country to proceed along that
path henceforth.
“To be realistic, to get 45 per cent share in the mining sector is
something that is uncommon. This could be the world’s best-ever
contract,” said Kamote, noting that it is difficult to find investors
who are willing to offer such a high percentage shareholding in the
mining sector.
If such contracts were to apply to all the companies seeking to invest
in the mining sector, then the contribution of the sector to
Tanzania’s GDP would be considerable.
Noting that there ways must be found of effectively negotiating with
companies which were licensed to conduct mining activities in Tanzania
before the 2010 Mining Act was passed, Kamote said doing so in an
effort to get them to observe the provisions of the new Act “would be
a great move!”
Sadly enough, though, the earlier contracts cannot just be terminated
unilaterally. Obliterating such contracts would have a
negative effect, perhaps leading to bankruptcy of the country – and,
at the same time, tarnishing the image of Tanzania in world business
circles.
Speaking during the signing of the joint venture pact at the head
offices of the Ministry of Energy & Minerals, Energy Minister William
Ngeleja said the mining sector is indeed contributing to the country’s
economy, with the contribution channeled directly to the Government.
“With a contract like the one that we are signing, this is a clear
indication that the country stands a chance of benefiting more – and,
later, the benefits will go to individuals as the Government will be
listing its shares at the local bourse,” he said.
The minister further said it was the Government’s intention to ensure
that new contracts which will be entered to with investors will be
joint ventures as a way of enabling the Government to own part of the
companies involved – instead of only waiting for tax revenues.
The writer can be reached on +255 784 707 798