Image: Nick Fraser.
BY ELIZABETH FABRI
The Government of Tanzania has passed laws allowing it to tear up and renegotiate contracts with natural resources companies; causing widespread concern and uncertainty for the ASX-listed miners, exploration companies and service companies with interests in the East African nation. Australia-Africa Minerals & Energy Group (AAMEG) chief executive Doug Horak examines how the legislation impacts Australian miners moving forward.
1. What do you make of the new laws passed by the Tanzanian Government?
Changes to the Tanzanian mining law in July have had a disruptive impact on the long-held view that the investment climate of Tanzania is an attractive one that is able to encourage foreign direct investment into its mining industry.
However, at the moment, it is unclear how these new laws are intended to be implemented, and that will only become apparent once the final regulations are in place.
Tanzania, like Australia, is a sovereign nation and therefore has every right to make changes to its legislation as they see best reflects its socio-economic requirements.
We have seen similar modifications to mining codes made across other mining destinations globally; some initial proposals are “wound back” to something more workable following a consultation period, while some are fully implemented.
AAMEG and its members look forward to working closely with the Tanzanian Government as it develops the implementing regulations in order to help ensure that the current uncertainty surrounding the changes is removed and to ensure that the new regulations provide the clarity and transparency required for the mining industry in Tanzania to continue to grow and prosper.
2.Do you think the laws will damage Tanzania’s foreign investment climate?
The Australian resource industry has a substantial interest and involvement in Tanzania.
As at July 2017, the Tanzanian Project Pipeline has 106 active projects of which 43 are active Australian company projects.
Of the Australian projects, only two are at the mine stage.
By working closely with industry, AAMEG hopes to gain a better understanding of the issues that could negatively impact the Tanzanian investment climate.
Our goal is to define and table the key issues of concern so that the final regulatory framework and its implementation will continue to promote the development of the resources industry and that Tanzania will continue to be viewed as an attractive destination for foreign investment in mining.
3. I understand there is a clause in the legislation that would allow the Government to take a 16 per cent free-carried stake in mining companies as well as the option to acquire up to a 50 per cent stake?
While there are concerns, definition of the final legislative framework is still required.
Once we fully understand the details of the legislation changes, we will be in a better position to assess the impacts on a company by company basis.
At this point, there is some short-term uncertainty and lack of clarity and the full impact on long-term foreign investment remains unclear.
The legislation is just a few weeks old and the detail will only be settled over the coming weeks and maybe months.
It is important that we work collaboratively with the Tanzanian Government to ensure the mining industry in Tanzania continues to prosper and in turn, is able to continue contributing to the country’s broader socio-economic development goals.
4. How has AAMEG responded?
Our immediate focus is on gaining clarity on the legislative changes and establishing a line of communication with the Tanzanian Government at the highest levels so that we may support a stable fiscal arrangement for current and future mining investment in Tanzania.
AAMEG and its Board are working extremely hard behind the scenes, engaging with members and non-members, Government representatives in both continents and other stakeholders.
Our role is to ensure the Australian response to this issue is well considered, collective, fact based and consistent – therefore we are taking an open-minded and collaborative approach, as we consult with all affected parties in order to build an informed view that will result in a positive outcome.
As a group we will seek to engage with the Tanzanian Government to gain clarity on the regulations and our goal is to end up with a positive working ‘road map’ for the way forward.
AAMEG has established a Tanzanian Working Group that consists of more than 20 affected parties who are currently aggregating, collating and disseminating information as it comes to light, and collectively working through each mining bill to develop a discussion paper that we hope will support the development of a sustainable regulatory framework in Tanzania.
5. Do you have plans to meet with the Tanzanian Government?
AAMEG would welcome the opportunity, when appropriate, to discuss the details of the legislation with the Tanzanian Government so that we as an industry group can bring the considered views of the industry forward during the development of the implementing regulations for the legislative changes.
Our aim, and that of our members is to see Tanzania continue to develop its mining industry in a transparent and equitable manner and for the country to continue be viewed as an attractive investment destination.