The Tanzania mining sector will lock out law firms, insurance companies, and foreign-owned banks. This is reportedly part of the new fierce regulations that intend to limit the ownership in the mining-related matter.
Tanzania, famous for being the fourth largest producer of gold in Africa, is set to overhaul the fiscal and regulatory regime of the mining sector. They aim to gain more profits from its vast mineral resources. The new regulation was passed last month and under it, foreign-owned mining groups are obliged to offer shares to the local government and the companies.
According to Reuters, the spokesperson of the mining ministry revealed that the new regulations became effective after Tanzanian President John Magufuli ordered authorities to make it happen. These new rules will restrict the old ways of foreign-owned businesses and establishments.
“A contractor, sub-contractor, the licensee (mining company) or other allied entity shall maintain a bank account with an indigenous Tanzanian bank and transact business through banks in the country,” according to the Mining (Local Content) Regulations of 2018. “The insurable risks relating to mining activity in the country shall be insured through an indigenous brokerage firm or where applicable an indigenous re-insurance broker,” the local content regulation added. Major foreign-owned banks operating in Tanzania include the following:
- Barclays Bank
- Standard Chartered Bank
- Stanbic Bank
- South Africa’s First National Bank (FNB)
Moreover, the local content rules are yet to be released, publicly. It is only the first among nine separate mining regulations issued by the mining ministry in January 2018. The new rules also put an emphasis to require “indigenous Tanzanian companies” to have five percent equity participation in a mining company. This is in addition to the 16 percent government free carried interest. At least $5million fine awaits the companies that failed to comply with these new requirements.