By Special Writer, NAIROBI.
A recent Verisk Maplecroft’s article
published on Mining.com attempt to cite Tanzania as one of the countries
ranking “high” in resource nationalism in Africa. The article which presents
its analysis based on the 2017 new amendments to mining laws introduced in Tanzania,
to mining rights activists, is yet another fruitless attempt to distort the
international community on our efforts to see equitable distribution of mineral
wealth.
The article claims, among other
provisions, the new requirement for a 16 percent free carried local ownership
of shares in all future mining undertakings, amounts to a “high risk” and
“resource nationalism.”
Let me say at the outset that, to
me, having working on mining sector activism for over 20 years now, reading the
analysis with a focus on its intellectual and professional foundation, I find
it to be an apparent demonstration that fact-checking, fairness and objectivity
are increasingly becoming alien rules among most modern western research
institutions and their media.
In the analysis, without any
aorta of evidence or data, we are forced to believe into the conclusion that Tanzania’s
mining sector is ‘dropping from medium to extreme risk.’ The lack of research
in the article is intriguing but understandable.
Contrary to the “extreme risk”
demagogue, recent report by the Tanzanian Mining Commission proves that since
2017, and other prior reforms in the mineral wealth economy, the number of
mining licenses requested by various investors, including foreign companies
mainly from Australia, China and UK, were on the increase. I will produce some
numbers.
The Verisk Maplecroft analysis goes
on to argue that the so called ‘dropping from medium to extreme risk’ is also attributed
to the introduction of export ban on unprocessed copper and gold. This argument
is entirely unreasonable, only serving to reveal who is behind this research
firm.
The truth is, Tanzania like many
other countries mitigating on how to get rid of the chilling effect of the
“resource curse” has lost a lot of money and missed opportunities for local
industrialization due to the exportation of unprocessed minerals.
Available evidence suggests one
area where most mining companies cheated on actual sales and revenues, and many
countries are spearheading reforms, is now to control exports and increase
local beneficiation to increase local wealth. These efforts are well captured
on this UN published report: https://www.un.org/africarenewal/magazine/april-2009/mining-profit-africa%E2%80%99s-people.
Specifically commending the then
reforms in Tanzania towards equitable distribution of mineral wealth, after
years of lost opportunities, the report said: “Tanzania has made some progress
in this area. In the past, gold- and diamond-mining investors often received
tax concessions lasting up to 20 years. So while mining accounted for nearly
half of Tanzania’s exports, the total taxes paid by all the mining companies
combined amounted to less than the tax paid by a single local company, Tanzania
Breweries.
“To address the problem, Tanzania
set up an 11-member committee of government officials, mining experts and civil
society representatives to look at how to make mining contracts work better for
all. The committee’s recommendations were used in renegotiating existing agreements.”
To be precise, available data for
mining exports, between 2007 and 2016 from Tanzania, suggest that whereas the
total value of exports was to the tune of 16 billion USD, government total
revenues, cumulative of all taxes and levies, was a mere 1.8 billion USD.
The reforms made by Tanzania’s
government in the 2017 laws and prior to that are meant to create a balance on
benefits and create more job opportunities to Tanzanians thus contribute to
social-economic well being of the nation. Since then, local investment on
smelting and beautification are on the rise.
It is shocking to see the UK
based firm strongly advocate for the status quo; unfair distribution of income
and job creation between investors and the country, lack of win-win in the
entire value chain and other unfair dealing in the industry. The new
arrangement in Tanzania seeks to realign this age long imbalance.
I thought, reacting to an age
long problem, a curse that left many countries poor despite abundant mineral
wealth, Tanzania offers one of the best examples in managing mineral resources
with a view to attain a win-win situation, but to Western media that causes big
problems to their owners and associates.
However, I would always think and
expect a fair analysis from respectable news and professional organization like
mining.com who would professionally know that the 2017 new legislations are just
a reinvigorated effort by the government of Tanzania to towards equitable
sharing of mining benefits, and ultimately, improve transparency and good
governance in the sector, but in vain.
Unfortunately, the reward from
mining.com is for the country to be branded in the “extreme risk” category. Is
this the modern day analysis of risk in the sector?
I was utterly most surprised also
by the article’s perception on the 16 percent free carried share. To me, it was
unfair for a country that owns the mineral resources, protecting it beneath its
soils for ages, to only benefit from taxes and levies, which often times, would
be lost on high pegged operational costs. Ownership was a factor that led to
the “resource curse” in my conception.
How can someone who only brings
technology and capital take full ownership of a country’s resource? To me, even
the new proposal for a 16 percent free carried share, for future mineral deals
in Tanzania, is still inconsequential.
Many countries are leading
towards that end. The South African new mining charter actually had a 30
percent proposal in 2018, see: https://m.engineeringnews.co.za/article/mining-charters-free-carried-interest-requirement-worries-industry-2018-06-21.
I believe the Tanzanian reforms
were fair, participatory and open enough for the industry to accept. It is no
wonder that recent data reveals that from 2017 to March 2019, the Ministry of Minerals
in Tanzania, through the Mining Commission, has approved over 7,320 new mining licenses
and three large investors are waiting approvals to invest a staggering 300
million USD in the sector.
All these companies have,
unequivocally, accepted the 16 percent Free Carried Interest as part of the
conditions in their licenses. We have witnessed recent negotiation between the
government of Tanzania and Barrick also leading to the inclusion of the same.
Where is the perception of “resource rationalization” coming from? For whose
interest?
Last but not least, companies
like Verisk Maplecroft and mining.com
have a moral and professional duty to support, not scare, the industry on the
reforms that some highly deprived countries wish to make for the benefit of
locals and foreign investors. Spreading rumours, uncalled for perceptions and
propaganda won’t save any purpose in the 21st Century.
Many countries, rich or poor, are
increasingly striving for equitable share and benefit from their natural
resources. Everyone must be part of the
change, for it is inevitable. Join the fast moving train of change in the
mining regime now, join the industry in the next station or you will be left
out for good.
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