On 10 January 2018, the Minister Responsible for Mining in Tanzania Mainland (Tanzania) issued the Mining (Local Content) Regulation, 2018 GN. No. 3 of 2018 (Local Content Regulations). These regulations have been made under section 102 and 112 of the Mining Act, 2010 (as amended by the Written Laws (Miscellaneous Amendments) Act, 2017). The regulations further elaborate on the requirements of local content in the mining sectors.

The Local Content regulations apply in Tanzania to:

• Contractors with mining agreements with the Government to undertake mining exploration and production activities
• Corporations established or designated for holding control of the Government's mineral assets
• Sub-contractors, being any third parties engaged by a corporation or contractor for the provision of services for mining operations carried out in the course of undertaking mining activities
• Licensees licensed to undertake mining activities, and
• Any other allied entity which includes those intending to supply goods and services to the above

Salient features of the Local Content Regulations

The Local Content Regulations affect the value chain stemming from mining activities. They require preference to be given to indigenous Tanzanian individuals or companies. Tanzania companies are those which are 51-percent equity-owned by a citizen or citizens of Tanzania and/or has Tanzanian citizens holding at least 80 percent of the executive and senior management positions and 100 percent of the non-managerial and other positions.

The regulations establish the Local Content Committee (Committee) under the Mining Commission (Commission). They require that where a non-indigenous Tanzanian company intends to provide goods or services to a contractor, a subcontractor, licensee a corporation or any other allied entity ("Relevant Parties"), it must incorporate a joint venture company in Tanzania with an indigenous Tanzanian Company and afford that indigenous Tanzania company an equity participation of at least 25 percent. The Relevant Parties are also required to:

• Set up a project office within the district where the project is located
• Submit a local content plan to be reviewed by the Commission
• Adhere to the local content levels for specific mining activities as set out in the Local Content Regulations
• Establish and implement a bidding process for the acquisition of goods and services which gives preference to indigenous Tanzanian Companies and provide the mode for evaluating bids received
• Inform and receive approval from the Commission of every contract or purchase order which is sole sourced or which exceeds US$100,000
• Ensure all middle and junior level positions in the Relevant Parties are held by Tanzanians only
• Source insurance, legal and financial services from Tanzanian institutions, and
• Have a bank account and transact business through an indigenous Tanzanian bank which has 100 percent or majority Tanzanian shareholding

Failure to adhere to these regulations carries monetary fines of between TZS50 million (equivalent to US$23,000) and a maximum of TZS10 billion (US$4.5 million), or imprisonment of between 1-10 years, or both.

The Relevant Parties have three months from the Gazettement of the Local Content Regulations to comply.

The article was also published in a client update by IMMMA Advocates, dated 23 January 2018. It is reproduced with permission of IMMMA Advocates.

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