MINING LAW UPDATE: THE MINING (INTEGRITY PLEDGE) REGULATIONS, 2018 AND THE MINING COMMISSION (GUIDELINE FOR SUBMISSION OF LOCAL CONTENT PLAN) 2018
- Synopsis of the new regulations.
- Summary of provisions of the Mining (Integrity Pledge) Regulations, 2018.
- Summary of provisions of the Mining Commission (Guideline for Submission of Local Content Plan) 2018.
On 13th July, 2018 the Ministry of Minerals published the Mining (Integrity Pledge) Regulations, 2018 (hereinafter referred to as “the Integrity Pledge Regulations”) signed by the Minister of Minerals and the Mining Commission (Guideline for Submission of Local Content Plan), 2018 (hereinafter referred to as “the Guideline for submission of Local Content Plan”) signed by the Commissioner of Minerals.
Publication of the Integrity Pledge Regulations and the Guideline for Submission of Local Content Plan is the significant implication and implementation of the Mining (Local Content) Regulations, 2018, which follows suit to the Government increasing focus and push towards locals inclusion and involvement in the extractive sectors; both as workforce as well as equity holders.
2.0. Summary of provisions of the Mining (Integrity Pledge) Regulations, 2018:
All holders of Mineral Rights are required to sign the Integrity Pledge form as prescribed in the First Schedule to the Integrity Pledge Regulations.
The Integrity Pledge Regulations extends this requirement of signing the integrity pledge form by requiring further all holders of Mineral Rights to make sure that any persons they engage with in undertaking any activity in connection with mining activities, comply with the Integrity Pledge requirements.
Main objectives of the Integrity Pledge Regulations are to:-
- develop a nation of high integrity, that is resilient and embraces universal good values;
- promote integrity, accountability and proper management of anti-corruption programme, for adoption by the corporate community operating in the mining industry;
- reinforce corporate governance, integrity, transparency and accountability in the daily operational processes and procedures of companies and businesses;
- facilitate, support and provide technical assistance for companies and businesses to implement the business integrity system as an effective preventive measure against corrupt and unethical practices;
- ensure proper insurance cover against losses, injuries or damage to environmental, communities, individual and properties that may be occasioned in the course of carrying mining activities; and
- complement the Prevention and Combating of Corruption Bureau’s efforts to set up the best business practice in Tanzania.
The Integrity Pledge Regulations applies to all holders of Mineral Rights (Contractor, Subcontractor, Licensee, or any other person) who undertake prospecting and mining activities in Tanzania Mainland. It requires all holders of Mineral Rights not to engage in any malpractices including tax evasion, double taxation, under or overpricing, transfer pricing and corruption.
Requirements & Conditions
Holders of Mineral Rights are required to comply with the Integrity Pledge by:-
- conducting mining operation or activities with utmost integrity;
- abstaining from engaging in any arrangement that undermines the Country’s financial and monetary systems, in particular, all earnings, payments or receivables derived from or in respect of mining operations or activities shall be received in, and accounted for in Tanzania;
- abstaining from engaging in any arrangement that undermines or is otherwise prejudicial to Tanzania’s tax system;
- disengaging in arrangement that is inconsistent with the Country’s economic Objectives, Policies and Strategies;
- maintaining satisfactory and effective insurance coverage against losses, injuries or damage to environment, communities, individuals and properties, that may be occasioned in the course of carrying out mining operations and/or activities; or
- disengaging in an arrangement that undermines or is otherwise prejudicial to Tanzania’s national security;
- ensuring that, they are fully in compliance with the Laws, Regulations, Rules and Policies.
Enforcement and Consequences of not complying with the Integrity Pledge Regulations
Rule 13 of the Integrity Pledge Regulations gives the Mining Commission powers to
- summon any person to submit or provide any information that the Commission deems necessary in the course of discharging its duties or functions;
- suspend or revoke any license on grounds of failure to comply with the requirements under these Regulations; and
- do all things which are necessary or desirable to give effect to the provisions of these Regulations.
Rule 14 of the Integrity Pledge Regulations provides for penalties for failure to comply with the provisions of the Integrity Pledge. It provides that;
“a holder of Mineral Right who fails to comply with the requirement of the Integrity Pledge shall be liable to the following penalties:
- suspension of a License or permit to engage in mining operation or activity;
- withdrawal or cancellation of a License;
- payment of fine as prescribed in the Act and any other applicable laws; and
- any other penalty as prescribed under the Act and any other Written Laws of United Republic of Tanzania.”
The Integrity Pledge Regulations requires all holders of Mineral Rights to make arrangements to the satisfaction of the Mining Commission as are necessary in order to comply with its provisions within three months after these Regulations come into force.
3.0. The Guideline for submission of Local Content Plan:
The Guideline for submission of Local Content Plan applies to all applicants of Mineral Rights and holders of Prospecting Licence, Mining Licence, Special Mining Licence, Processing Licence, Smelting Licence and Refining Licence issued under the Mining Act; including their Contractors, Subcontractors or other allied entity carrying out mining activities.
All applicants and holders of Mineral Rights are require to insure that, in all their activities first consideration shall be given to goods and services provided in Tanzania and employment and training of Tanzanians.
Guideline on contents of the Local Content Plan
- Company/society particulars;
- non company applicants’ particulars;
- established office address and location of the project;
- information of the contact person;
- employment and training sub-plan;
- succession plan for positions held by foreigners;
- research and development sub-plan;
- technology transfer sub-plan;
- insurance and re-insurance sub-plan;
- banking and financial services sub-plan;
- legal services sub-plan;
- health, safety and environment services;
- research and development relating to in-country services;
- information system, information technology and communication services; and
- works, goods and equipment manufactured/procured/available in Tanzania.
Guidelines on contents of the Local Content Plan is basically the implementation of Rule 10 (1) and Rule 12 (1) of the Mining (Local Content) Regulations, 2018 which provide for submission of the Local Content Plan to the Mining Commission for approval and general content of the Local Content Plan which must ensure that Tanzanians are given consideration for employment and provision of services.
The Integrity Pledge Regulations and the Guideline for submission of Local Content Plan signifies a positive sign that the Government earnestly intends to implement “the Local Content” notion in the Mining Sector in Tanzania as well as a step towards transparency and integrity in the sector.
However, Implementation of the Local Content in the Mining Sector has brought inconsistencies and confusion to foreign investors such as involving of local people in their operations as they are of the view that local people do not possess competitive skills. On the other hand, economist are of the view that local content policy may deny local producers markets especially where the policy allows investors to source from outside where the investor fails to find goods of “satisfactory quality” within the country. There is a need for the Government to clear the same by publishing regulations that will set clear lines of when and what is expected to be done by foreign investors to create the win-win situation on the part of the Government and Investors on the other hand and most of all to local Tanzanians who are the targeted beneficiaries of “the Local Content” notion. Stakeholders activation is also an advised move especially regarding this novel aspect in the industry and auxiliary services to it.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.