Legal Alert | Tanzania Enacts Significant Reforms to the Mining Local Content Regulations
On 8 February 2019, the Ministry of Minerals issued the Mining (Local Content) (Amendments) Regulations, 2019 (the “Amendment Regulations”), which are to be read as one with the Mining (Local Content) Regulations, 2018 (the “Local Content Regulations”) and effect the following changes:
(i) a decrease from 51 to 20 percent in the local shareholding requirement for indigenous Tanzanian companies;
(ii) an extension of timelines for the Mining Commission and Local Content Committee to review local content plans; and
(iii) a decrease in the local shareholding requirement for a Tanzanian bank to meet the local content requirements.
Indigenous Tanzanian Companies
An “indigenous Tanzania company” is now defined as a company incorporated under the Companies Act that has (a) at least 20 percent (as compared to 51 percent previously) of its equity owned by a citizen or citizens of Tanzania; and (b) Tanzanian citizens holding at least 80 percent of executive and senior management positions and 100 percent of non-managerial and other positions.
Timelines for Review by the Local Content Committee and Mining Commission
New timelines have been provided for certain stages of review by the Local Content Committee and the Mining Commission of local content plans that are submitted by stakeholders. The timeline now reads as follows:
i. The Committee shall within 60 working days (as compared to 25 working days previously) of receipt of the local content plan, review and assess the plan and inform the Commission in writing of the recommendations of the Committee;
ii. The Committee shall, if satisfied that the plan complies with the requirements of the Local Content Regulations, recommend the local content plan to the Commission for approval;
iii. Where the Committee is dissatisfied with the local content plan, it shall recommend that the Commission reject the plan and it shall state the reasons for the recommendation;
iv. The Committee may for the purpose of reviewing or assessing the local content plan (a) provide as far as practicable to persons involved in the mining industry or likely to be affected by the decision a reasonable opportunity of being heard; and (b) take into account any representation made before submitting its recommendation to the Commission;
v. The Commission shall communicate its decision to the stakeholder within 30 working days (as compared to 7 working days previously) of the approval of the recommendations of the Committee;
vi. Where, based on the recommendations made by the Committee, the Commission determines not to approve the local content plan in whole or in part, the Commission, shall within 30 working days (as compared to 7 working days previously) of making the determination, notify the applicant and furnish the applicant a written statement of the reasons for rejection by the Commission to approve the local content plan.
vii. Where the Commission rejects to approve the local content plan submitted by the applicant, the applicant shall (a) revise the local content plan taking into account the recommendations of the Commission; and (b) within 14 working days, submit the revised local content plan to the Commission.
Notably, the Amendment Regulations strike out Regulation 11(8) in its entirety, which previously provided for a deemed approval of the local content plan, where the Commission fails to notify the applicant of its approval or otherwise of the revised local content plan, upon expiry of 50 working days from the date of submission.
Furthermore, stakeholder engagement is now required prior to the Minister of Minerals prescribing any additional minimum local content levels to those currently specified in the First Schedule to the Local Content Regulations.
Financial Services Local Shareholding Requirements
With regards to the provision of financial services, a contractor, subcontractor, licensee or other allied entity is still required to retain only the services of a “Tanzanian financial institution or organization”. The Amendment Regulations provide that “a Tanzanian financial institution or organization” and a “foreign financial institution or organization” shall have the meanings ascribed to them under the Banking and Financial Institutions Act (the BAFIA). The BAFIA describes a foreign bank or financial institution as a bank or financial institution incorporated outside Tanzania, which does not propose to transact banking business in Tanzania. Although a “Tanzanian financial institution or organization” is not expressly defined in the BAFIA, it could be interpreted to mean a financial institution or organisation that is not captured by the definition of a foreign bank or financial institution.
Contractors, subcontractors, licensees or other allied entities shall maintain a bank account with a Tanzanian bank and transact business through banks in the country. A “Tanzanian bank” shall mean a bank that has 100 percent Tanzanian or not less than 20 percent of Tanzanian shareholding. This is in contrast to the former definition of an “indigenous Tanzanian bank,” which required 100 percent Tanzanian or a majority Tanzanian shareholding.
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|Shemane Amin | Director
|Samiath Mohamed | Associate