Tanzania's balancing act

A number of controversial exploration projects in the wildlife areas of Tanzania have placed renewed emphasis on the balance between conservation and development, writes Leon Louw, editor of the magazine African Mining.

Tanzania is better known for its wildlife and natural beauty than its mineral riches. However, more and more good deposits are discovered, and that has drawn a flood of new exploration companies to the country. A number of them have been awarded exploration licenses in wildlife areas. Government is under increasing pressure to award these licenses in order to broaden the Tanzanian tax base. However, they are also obliged to protect wilderness areas. Currently the Tanzanian government is really caught between a rock and a hard place. Despite ferocious opposition from some quarters, a number of decisions have swung in favour of the mining and exploration companies.

According to Amalia Lui, senior associate at Tanzanian based law firm Clyde & Co East African Resources, she has received a screening decision from the National Environmental Management Council (NEMC) of Tanzania regarding the Madaba uranium project. Madaba is located in the Selous Game Reserve, a World Heritage site. Surprisingly the NEMC have recommended a preliminary environmental assessment (PEA) as it has decided that the project does not require a full environmental impact assessment.

It seems that uranium, oil and gas are currently the big drawcards in Tanzania, especially in the Selous area. Another company Mantra Tanzania, a subsidiary of Mantra Resources, has received the go-ahead to mine uranium in Selous. It was announced that Mantra received their mining licence for the Mkuju River project way back in 2013. The environmental impact assessment certificate was issued in October 2015. According to Deputy Minister of Energy and Mining, Charles Kitwanga, mining was supposed to have started in April this year.

Uranium has also been discovered in northern Tanzania. According to a number of reports there are traces of uranium at Lake Jipe. Tanzania Minerals Audit Agency (TMAA) development manager, Julius Moshi, told East African Business Week that geologists are currently conducting tests to determine the quantity and economic viability of the uranium. Significant uranium deposits have also been discovered at Mwanga close to Kilimanjaro.

Prior to 1990, limited geological investigations were carried out by a number of companies, coordinated through State Mining Corporation (STAMICO) and the Geological Survey. Economic Policy changed after that which ultimately resulted in the formulation of the Mineral Policies of 1997 and 2009 and the subsequent increase in exploration activities. According to Lui, exploration activities continue to increase as foreign direct investment (FDI) continues to flow into the country. “FDI into the mining industry now averages USD460-million per annum. Mineral investors continue to acquire prospective areas which have resulted into defined mineral reserves,” says Lui.

Large multinational companies currently active in Tanzania include the Japan Oil, Gas and Metals National Corporation (JOGMEC) and Russian ARMZ. Established in 2004 JOGMEC integrates the functions of the former Japan National Oil Corporation, which was in charge of securing a stable supply of oil and natural gas, and the former Metal Mining Agency of Japan, which ensured a stable supply of nonferrous metal and mineral resources and implementing mine pollution control measures.

The ARMZ of Russia acquired shares from the parent company, Mantra Resources of Australia, of which Mantra Tanzania is a subsidiary. ARMZ Uranium Holding is the mining arm of ROSATOM, the Russian Atomic Energy Corporation, one of the leaders of the global uranium market. ARMZ Uranium Holding is a successor of the world largest uranium mining facility created by the Soviet Union. In 2008, as a result of nuclear industry restructuring completion under ARMZ control, all uranium-mining plants of Russia and a number of joint ventures on the territory of CIS and other overseas countries were consolidated. In 2010, JSC Atomredmetzoloto became the owner of 51.4% of Canadian uranium mining company Uranium One. In 2011, ARMZ Uranium Holding acquired 100 % of the Australian listed Mantra Resources. Mantra was to develop the Mkuju River project in the United Republic of Tanzania. JSC Atomredmetzoloto is a member of the World Nuclear Association.

Mining in wildlife areas

There are a number of different wildlife areas in Tanzania that have been affected by recent exploration activity. It is important to note the difference as it affects the ease with which a project will get the environmental green light. Lui says that game reserves are large areas of land where wild animals live safely or are hunted in a controlled way for sport. Most game reserves are open to the public, and tourists commonly take sightseeing safaris. In a game reserve, ecosystems are protected and conservation is usually strictly enforced and observed.

A reserve forest or a reserved forest is a specific term for designating forests and other natural areas which enjoy judicial and / or constitutional protection under the legal systems of many countries. The term forest reserve may also be used in some contexts in these countries.

A National Wildlife Area is a conservation status for a geographical region that restricts most human activities on that region, large in size, containing both flora and fauna of different kinds However, land use permits may be issued "for activities that are compatible with conservation".

Protected areas in Tanzania are extremely varied, ranging from sea habitats to grassland and savanna areas. The top of the highest mountain in Africa, Kilimanjaro is also a protected area. About a third of the country's total area is protected to a certain degree as national park, game reserve, marine park, forest reserve and the like.

The impact of mining

According to Lui the increased exploration and mining activities will have a significant impact on the socio-economics and the natural environment of Tanzania. Lui says that most large-scale mining companies comply with national rules and regulations, but they’re reluctant to go beyond compliance, as this is not a legal binding requirement. “The mining companies argue that they pay all the required taxes and loyalties to the government and therefore it is the government’s responsibility to return some of the mining revenues back to the local communities for development,” says Lui.

Large mining operations open up remote areas where local communities often find themselves outside the economic mainstream of the national economy. In Tanzania there is limited institutional capability to manage the social and economic implications of such sudden growth of investments in remote areas. Any local income from mining is mainly through auxiliary activities such as sale of food, operating restaurants and sale of soft drinks and alcohol.

Despite the negatives, the production of gold has enabled the investors to pay taxes to the Government to the tune of 47-billion Tanzania shillings by 2002, 17 times more than in 1997. This is still less than 15% of the mining investment over the five years. At this rate, and according to the observations by Tanzania’s Minister for Energy and Minerals recently, the sector has not made any significant contribution to the alleviation of the country’s poverty. “It will take many years for the impact of mining to be felt,” says Lui.

Employment levels

Mining is expected to create employment opportunities and to help communities according to their corporate social responsibility. The number of employees tends to increase during the peak production period and shrink during the low season.

GGM, the biggest mine in East Africa to date, boasts 2 400 employees (of which 93% are Tanzanian nationals). This makes GGM one of the biggest private sector employers in Tanzania. Nevertheless, employment does not necessarily fall within the locality or even within the same district. Rather, employment cuts across the nation suggesting that mining employment has an impact at national level rather than on local communities.

When claim holders enter into agreements with large-scale miners they are restricted to a few development activities within the holdings. In many cases such restrictions have affected negatively the employment of members of the village communities in mining areas.

Most of the mining technology applied by large-scale mining companies is open pit technology. Out of six large-scale mining companies, currently only one uses underground mining technology. Open pit areas become permanently damaged and cannot be put to any economic or social use.

Many disputes between claim holders and smallholder farmers have been reported in Tanzania. Farmers often plant perennial crops in areas with title deeds. Sometimes claim holders are advised by mineral officials to allow smallholder farmers to plant seasonal crops in areas that are temporarily not operating, but farmer's plant tree crops. Both annual and perennial cropping cause disputes particularly when the claim holder intends to mine the planted areas (MRSDSAP and ERA 2001).

The value of mines

According to Lui most environmentalists are against mining in game reserves or in conserved areas. “However, there are a number of citizens who support mining in conserved areas subject to stringent environmental conditions. As a country, such activities are needed to boost the economy of the country.

Mining has grown to one of the leading sectors in Tanzania, with the value of mineral exports increasing tremendously each year. In 2011 the value of mineral exports reached USD2.1-billion, more than 95% of which emanates from six gold mines. Available reports have it that the mining sector contributes about 3% to annual GDP. Tanzania has the ambition to make the mining industry account for 10% or more of GDP by 2025. In the last decade, the country has witnessed growth in the mining sector with reputable mining companies like Barrick Gold (Acacia), Ashanti Anglo-Gold and Resolute investing in large scale mines.

Minerals available in Tanzania include gold, diamonds, gemstones (such as rubies, aquamarine, tanzanite, sapphire, emerald, rhodolite, opal, zircon, alexandrite, garnets, tourmaline, spinel, peridot and iolite) iron and base metals (nickel and cobalt), platinum group metals (platinum, palladium and Rhodium), industrial minerals (soda ash, kaolin, salt along coast and inland lakes, vermiculites, limestone, silica sands, phosphate, gypsum, mica, dimension stones ie. granites, travertine, marbles, quartzite and coal resources.

Tanzania is the fourth largest gold producer in Africa after South Africa, Ghana and Mali and is the sole producer of the precious stone Tanzanite in the world. Gold production currently stands at roughly 40 tonnes a year, copper at 2 980 tonnes, silver at 10 tonnes and diamond at 112 670 carats. Business Monitor International (BMI) forecasts average annual growth in the mining sector of 7.7% between 2013 and 2015.

Tanzania is experiencing a remarkable mining boom, largely driven by foreign investment. According to Lui the speed and scale of this development means that environmental considerations are in danger of being marginalised or even totally ignored.

“As a result some of Africa's most valuable biological real estate, including the forest reserves, game reserves and national wildlife areas (protected areas), are in grave danger,” says Lui. At present, attention is focused on the local impacts of mine-site operations, but as far greater threats and potential conservation opportunities revolve around infrastructure expansion, bush meat and wildlife trade, human migration, governance and macro-economic changes associated with mining development.

“Mining is undoubtedly going to alter the face of Tanzania. Opportunities for sustainable development, poverty alleviation and improved environmental protection exist, and such positive outcomes are achieved under current conditions and legal framework in Tanzania,“ Lui concludes.

The following is a non-exhaustive list of permits and licences necessary to mine in Tanzania:   

·        Prospecting licences, mining licences and special mining licences issued by the Ministry of Energy and Minerals;

·        Business licence issued by the Ministry of Industry and Trade;

·        Workplace registration and compliance certificate issued by the Ministry of Works;

·        Water permits from the relevant water board;

·        Tax Identification certificate and Value Added Tax Certificate issued by the Tax Revenue Authority; and

·        Environmental impact clearance certificate from the National Environment Management Council.

Local and Foreign Participation in Mining

Exploration and mining is open to locals and foreigners or joint ventures between local/ foreign companies except for the following:

·        Foreigners are not permitted to hold or conduct their exploration/mining activities using PMLs;

·        Gemstone exploration and mining is reserved for locals. The minister may authorise some projects to run jointly by locals and foreigners (on 50/50 equity); and

·        Licensing of exploration and mining is based on a ‘first come first served’ principle.