The mining industry in Tanzania, particularly gold mining, has continued to contribute significantly to the country’s revenue from mineral resources. Gold accounted for approximately 80% of mineral exports, indicating its dominance in the sector. The period between July 2023 and March 2024 saw a notable increase in the price of gold per ounce, driven by increased purchases by Central Banks, geopolitical conflicts, inflation concerns, and anticipated cuts in interest rates by the US Federal Reserve.
On the other hand, nickel mining, which Tanzania has been gearing up for, experienced a temporary slump in the global market. Despite reaching a 10-year high in March 2022, nickel prices have since declined consistently into 2023 and part of 2024. The global economic downturns and the crisis in Ukraine also significantly impacted the global diamond trade, affecting the export value of diamonds from Tanzania.
Regarding inflation, Tanzania experienced a decline from 3.3% in July 2023 to 3.0% by the end of March 2024, marking a continuous decrease in headline inflation since March 2023.
The mining sector has shown consistent growth, contributing significantly to the Gross Domestic Product (GDP) and being the largest contributor to exports by value. This growth is attributed to increased metal prices for gold and silver, as well as sustained output.
Also, read Nyanzaga Gold Mine Project Sparks a Global Showdown as Clash of Foreign Mining Giants.
Vision 2030: “Madini ni Maisha na Utajiri”
Vision 2030: “Madini ni Maisha na Utajiri” (Minerals are Life and Wealth) reflects the government’s ambitious drive to unlock the full potential of strategic and critical minerals (SCMs). This commitment shines through initiatives such as extensive High-resolution Airborne Geophysical Surveys aimed at identifying untapped opportunities in these minerals.
In 2024, significant legislative changes were proposed during Parliament’s recent session (Session 14), focusing on enhancing oversight of SCMs. These amendments underline the government’s dedication to ensuring responsible and sustainable mining practices.
Since July 2023, Tanzania has issued a Special Mining License to Nyati Mineral Sands Limited for the extraction of Heavy Mineral Sands, as well as a refining license to Tembo Nickel Refining Company Limited for a Nickel refinery. These projects, situated in Pangani, Tanga, and Kahama, Shinyanga respectively, signify a strategic step towards harnessing the economic potential of Tanzania’s mineral wealth.
Year Under Review
Reviewing the Execution of the 2023/24 Budget
In the fiscal year 2023/24, Tanzania underwent a rigorous process of revenue collection and expenditure allocation, reflecting the government’s financial management strategies. The revenue collection target of TZS 1,006.71 billion was set, with a distribution plan of 87% to the Consolidated Fund and 13% to various institutions under the Ministry. As of March 2024, the Ministry successfully collected TZS 548.3 billion, achieving 62.1% of the annual target.
The Ministry was initially allocated TZS 89.4 billion on the expenditure front, which was later revised to TZS 163 billion. This revised budget included TZS 96.8 billion for development expenditures and TZS 66.2 billion for recurrent expenditures, including salaries. By March 2023, the Ministry had already spent TZS 135.70 billion, indicating significant progress in utilizing the allocated funds.
This review underscores the government’s commitment to fiscal responsibility and efficient resource allocation. Successful revenue collection and strategic expenditure allocation are crucial steps towards achieving the country’s economic development goals.
Analysis of Development Expenditure
In addition, the Ministry secured TZS 925 million for the Phase 2 construction of its headquarters in Dodoma. Furthermore, TZS 76 billion was allocated for various purposes, including completing the Tanzania Gemological Center (TGC) design, acquiring vehicles, settling a deed with Winshear Gold Corporation, and enhancing the capacity of TGC and Ministry staff in mineral value addition activities.
Read Related: Tanzania-Winshear Settlement: Did the $30M Payout Signal Desperation or Diplomacy?
Recommendations:
Timely allocation of development funds is critical for meeting future budget goals. Efficient contract management can expedite expenditure disbursement, preventing project delays and financial penalties. The government should consider increasing development expenditure beyond the 59% allocated in the reviewed year to enhance the mining sector’s GDP contribution.
Moreover, the Ministry should prioritize institutional capacity building to effectively support the industry’s diverse needs across various minerals and their value chains.
Accomplishment of Key Priorities – 2023/24
Mining Sector Investment Promotion:
- Issuance of Special Mining License to Nyati Mineral Sands Limited for Heavy Mineral Sands mining in Pangani, Tanga Region.
- Grant of Refining License to Tembo Nickel Refining Company Limited for Nickel Refining in Kahama, Shinyanga Region.
Enhanced Mineral Export License Issuance:
- 11,258 mineral export licenses were issued in 2023 (compared to 10,318 in 2022).
- Increased demand for gemstones and coal in neighbouring countries contributed to this rise.
- 115 additional mineral import licenses were granted between July 2023 and March 2024.
Mining Sector Oversight by the Mining Commission:
- Supervision in mineral identification, valuation, and sale.
- Conduct various audits, including operational, financial, and environmental audits, to ensure compliance with regulations.
- Monitoring of Mine Closure Plans.
Development of Small-Scale Miners and Citizen Participation in the Mining Economy Value Chain:
- Training of 10,213 small-scale miners on environmental, safety, occupational health, proper business management, taxes, and royalties.
- 100 small-scale miners from FEMATA visited processing facilities and had meetings with mineral dealers in China.
Institutional Capacity Building:
- Design completion of an 8-storey building to house classes, student dormitories, value addition workshops, laboratories, lapidary equipment, and offices.
- Acquisition of 5 drilling machines by STAMICO for deployment to small-scale miners.
- Acquisition and installation of 2 coal briquette machines in Kisarawe, Pwani, and Kiwira, Mbeya.
- Construction of the Mining Commission HQ at 77% completion.
Human Resources Development and Workplace Improvement:
- Recruitment of 30 new staff and filling of 26 vacancies through transfers.
- Short training for 239 staff members and long-term training commitments for 100 individuals in institutions within the country and overseas.
- Staff promotions and disbursement of employee benefits.
Promotion of Tanzania as a Mining Investment Destination:
- Tanzania’s debut participation as a Country in the Mining Indaba 2024, held in Cape Town, South Africa.
- Successful organization of a Mineral Investment Forum by the Ministry of Mines in Dar es Salaam, Tanzania, in October 2023.
Local Content Participation and Performance & Community Social Responsibility
During the review period, local content participation and performance in the mining sector were notable. 801 Local Content Plan applications were submitted to the Mining Commission, and 797 plans were approved. However, 4 plans did not meet the criteria and were advised for revision.
Additionally, the establishment of the Buzwagi Special Economic Zone (SEZ) is a significant development for three Tanzanian companies. This SEZ focuses on manufacturing consumables for mining operations, aiming to reduce the need to import critical products such as wire mesh, rock bolts, core trays, and conveyor belts.
In terms of community social responsibility, mining companies demonstrated a commitment to local development. They collectively spent TZS 17.08bn/- on various projects in their respective District Councils. Furthermore, the ministry provided training on CSR Regulation to various stakeholders, including the Parliamentary Committee on Energy and Minerals, Mining Companies, Civil Societies, and Local Government Authorities.
Forward Outlook
For the 2024/25 budget proposal, several key implementation areas have been identified to drive growth and development in the mining sector:
The government plans to increase revenue collection, aiming to enhance the sector’s contribution to the national income. There is a strong emphasis on developing strategic and critical minerals, with efforts to promote investment in value addition and establish an in-country gemstone auction.
Additionally, plans include executing airborne high-resolution geophysical surveys to gather essential geological data for effective mining operations.
Another important aspect is the development of artisanal and small-scale mining (ASM), with provision for extension services to support this sector. Capacity building for institutions under the Ministry is also on the agenda to ensure efficient service delivery and governance. Lastly, there is a focus on reviewing corporate social responsibility (CSR) laws and regulations to enhance community engagement and sustainable practices.
To achieve the above-proposed outputs, the Ministry is planning to spend TZS 231.98 billion, which is expected to generate revenues for the government amounting to TZS 1,164.85 billion.
For the 2024/25 budget, the Ministry has outlined several strategic priorities aimed at enhancing the mining sector’s efficiency and impact. The Mining Commission intends to streamline its licensing system, improve safety and environmental standards, and ensure local communities benefit from mining activities.
The Geological Survey of Tanzania plans to enhance its research and mapping capabilities, support artisanal miners, and provide better laboratory services. STAMICO aims to generate revenue from projects like briquette production and drilling services, develop existing licenses, and engage in joint venture projects.
Strategic Priorities – 2024/25 Budget
The Tanzania Gemological Center (TGC) is making significant strides, with ongoing construction to create a hub for gem and jewellery technology training. The center will also feature accommodations for students. Already, 101 students are enrolled in gemology and lapidary programs. The TGC aims to add value to gemstones and produces various jewellery and decorations from mineral products.
Additionally, the Tanzania Extractive Industries Transparency Initiative (TEITI) is actively working to enhance transparency in the mining sector. They are preparing to publish their 15th Report, which will include details on the balance of payments by mining companies and the publication of contracts.
TEITI is also developing an electronic reporting system for companies to track and report payments made to the government, facilitating easier tracking, collation, and quick report preparation.
VISION 2030: The vision aims to have 50% of the area covered through a detailed Geophysical Survey by 2030, with a target of 165,574m2 covered in 2024/25.
The Mining For a Better Tomorrow (MBT) Program prioritizes women and youth by issuing licenses and providing access to capital goods. It intends to catalyze sectoral growth, increase employment opportunities and foster economic development.
During the Budget Discussion, several important issues were raised:
Tanzania’s significant helium deposits, especially in Lake Rukwa, require a strategic and expedited extraction approach. Parliamentarians emphasized the need to capitalize swiftly on this global asset through a well-planned extraction process to optimize benefits for the country.
The wealth generated from mineral resources should directly benefit citizens, starting with sustainable extraction practices. Mechanisms should be established to enable local community participation in ownership, the value chain, and the advantages stemming from mining companies’ social investments. The Mining For a Better Tomorrow (MBT) program must ensure increased participation of the vulnerable section of the community for sustained wealth creation.
Revocation of idle licenses in accordance with the law is critical. Parliamentarians encourage officials not to be deterred from executing the law, bearing in mind the potential risks of any misstep. Updates to regulation and legislation may be needed to grant protection to officers when executing matters of national interest.
The Honorable Minister’s role in mediating conflicts between local investors is crucial for sector growth, especially when capital is limited.
Financial institutions are urged to take advantage of the budding market and develop a clear understanding of the sector to perform an adequate risk assessment and facilitate sustainable financing.
Robust systems are essential to prevent revenue loss through mismanagement, smuggling, or illicit trade. Ensuring government revenue integrity is paramount for the sector’s sustainability.