The Minister of Minerals in Tanzania Mainland recently issued the Mining (Local Content) (Amendment) Regulations (the amendments) through Government Notice No. 479 of 2022.  The amendments brought by the Minister are aimed at addressing regulatory and practical challenges affecting adherence to local content in the mining sector as provided under the Mining Local Content Regulations, 2018 (the amended Regulations).

Salient features of the amendment:

1. Definition

The amendments have amended the defining regulation by deleting the definition of the following terms and substituting them for the following;

1. Mining Activities

Mining activities include provision of goods and services for purposes of mining operations. The Amendments now define mining activities as any activity engaged in within and outside Tanzania related to the exploration for, development and production of minerals, the acquisition of data, mining and extraction or mining of minerals, storage, transportation and decommissioning and the planning, design, construction, installation, operation, provision of goods, services and use of any facility for the purpose of the mining operations.

 

1. Contractor

The amendments define a contractor as a person who has entered into a contract with a licensee within or outside the United Republic for provision of goods and services in mining operations. Previously, a person became a contractor upon acquiring a mining agreement with the United Republic to undertake mining exploration and production activities under the Mining Act.

 

With these amendments, the subjects to which the Regulations apply is widened, such that, all persons who are contractually obliged to provide services or goods to the mining sector are required to comply with the Regulations as contractors. Thus, service providers such as law firms, telecom companies, financial institutions, and caterers are now required to comply with reporting requirements under the Regulations, including submission of local content plans and performance reports to the Mining Commission.

 

1. Subcontractor

The term ‘subcontractor’ is amended, to the extent that, a subcontractor is a third party to whom a corporation or contractor has entered into a contract for provision of goods and services for mining operations. Before these amendments, a subcontractor ought to have a mining contract with a corporation or contractor for provision of services for mining operations.

 

2. Procurement of Goods and Service for mining operations

The amendments have introduced the conditions where a proposed contract for goods and services for mining operation shall be deemed to be sole sourced. The conditions are where:

1. a contractor, subcontractor, licensee or other allied entity has issued an advertisement relating to expression of interest for the provision of the particular goods or services and is only able to obtain one particular tenderer who is suitable for the provision of the goods and services; or

 

1. there is an urgent need for the goods and services and engaging in tendering proceedings would therefore be impractical, where the circumstances that gave rise to the urgency were neither foreseeable by a contractor, sub-contractor, licensee, other allied entity nor the result of dilatory conduct on its party.

The conditions have been put in place to encourage the competitive bidding procedures in procuring goods and service providers to the mining operations.

 

3. Submission of Annual and Quarterly Local Content Performance Reports

The amendments now require submission of annual local content performance reports to the Mining Commission within sixty days of the beginning of each year after commencement of mining activities.  To make the process easy, the Fourth Schedule to the Regulations, provides for the format of the annual and quarterly performance reports. Failure to submit any quarterly or annual performance report within the required time is punishable by payment of a fine of Tanzanian Shillings Ten Million (TZS 10,000,000/-). Furthermore, failure to effect payment or continuous non-submission of the report leads to prohibition of bidding on provision of goods and services until the requirement for submission of the reports is complied with.

 

4. Penalty to the Contractor, Subcontractor, Licensee or Other Allied entity.

The amendments still requires the contractors, subcontractors, licensees or other allied entities to carry out mining activities by adhering to the local content requirement, submission of local content plan and inform the Mining Commission of each proposed contract or purchase order. Failure to satisfy the content requirement of a local content plan; and failure to inform the Mining Commission of each proposed contract or purchase order shall lead to cancellation of a contract in respect of mining activities and payment of administrative penalty of five percent of the value of the proceeds obtained from the mining activity in respect of which the breach is committed or Tanzanian Shillings Fifty Million (TZS 50,000,000/-) whichever is greater. The amendment has reduced the penalty which initially was USD 5 Million.

 

Conclusion

Tanzania local economy depends on effective integration and involvement of local stakeholders. The Amendments are aimed at putting this phenomenon into reality. We call upon every stakeholder to participate fully and comply with the requirements of the law to avoid unwanted liabilities.

 

Important Notice: 

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