TANZANIA: AMENDMENTS TO THE MINING (LOCAL CONTENT) REGULATIONS
On 8 July 2022, the Minister of Minerals (Minister) published the Mining (Local Content) (Amendment) Regulations via Government Notice No. 479 of 2022 (Amendment Regulations) amending the Mining (Local Content) Regulations, 2018 which were previously amended by the Mining (Local Content) (Amendment) Regulations 2019 (Local Content Regulations).
Amendments to the Local Content Regulations
Regulation 2 of the Amendment Regulations has introduced new definitions to the term ‘contractor’, ‘mining activities’ and ‘sub-contractor’, which are now defined as follows:
- Contractor - a person who has entered into a contract with a licensee within or outside Tanzania for the provisions of goods and services in mining operations.
- Mining activities - any activity engaged in, within and outside Tanzania, related to the exploration for, development and production of minerals; the acquisition of data; the mining and extraction or mining of minerals; storage, transportation and decommissioning; and the planning, design, construction, installation, operation or provision of goods, services and use of any facility for the purpose of mining operations; and
- Sub-contractor - a third party with whom a corporation or contractor has entered into a contract for the provision of goods and services for mining operations.
These definitions have generally widened the scope of the application of the Local Content Regulations. Other amendments introduced by the Amendment Regulations include the following:
- Regulation 5, which establishes the Local Content Committee, is amended by replacing the Director of Labour and Employment with the Labour Commissioner. Further, there are two new members of the Local Content Committee, namely a representative from the Immigration Department and one from the Commissioner for Minerals responsible for local content.
- Reference to regulation 7(3) in regulation 11 of the Local Content Regulations is deleted and substituted with reference to regulation 10(3) of the Local Content Regulations.
- Regulation 15(5)(b) is amended by replacing the provision of services in association with an indigenous Tanzanian company and instead requiring a non-indigenous Tanzanian company to provide goods and services in joint venture with an indigenous Tanzanian company.
- Regulation 16 is amended by the addition of sub-section 5 introducing conditions in which contracts can be sole sourced including: (i) where there has been only one particular tenderer who is suitable for the provision of the goods and services and (ii) situations of urgency that do not result from any dilatory conduct of the party.
- Regulation 20 is amended by the addition of sub-section 3 introducing a prescribed format for filing quarterly performance reports which is now set out in the Forth Schedule of the Local Content Regulations as amended by the Amendment Regulations. The amendment to regulation 20 of the Local Content Regulations also introduces the requirement to file quarterly performance reports no later than 14 days after the end of each quarter.
- Regulation 25 is amended by replacing the words ‘commission’ appearing in the first and fourth lines of the regulation with ‘ministry’.
- Regulation 37 is amended to extend the time for submitting the annual local content performance report from 45 to 60 days.
- Regulation 49 has seen the largest overhaul, revising the offences and penalties contained under sub-section 6 and adding two other sub-sections. The penalties for non-compliance now include the cancellation of a contract in respect of the mining activity and an administrative penalty of 5% of the value of the proceeds obtained from the mining activity in respect of which the breach is committed or TZS 50 million (approximately USD 21 450), whichever amount is greater, instead of the previous USD 5 million.
- Regulation 49(7) is amended by introducing a penalty of TZS 10 million (approximately USD 4 290) for failure to submit either the quarterly or annual performance report within the required period.
- Regulation 49 is also amended by adding a new sub-section 9 that introduces additional penalties for a contractor, subcontractor, corporation or other allied entities other than mineral right holders contravening the prohibition from bidding on the provision of goods and services, or for failing to pay the fine for non-submission of the quarterly or annual performance report as noted above, or for ongoing non-submission of the report.
Whilst the Amendment Regulations introduce some notable amendments, such as reducing the hefty fines imposed for non-compliance with certain provisions of the Local Content Regulations, some of the key issues with the Local Content Regulations have still not been addressed by the Amendment Regulations. For example, the discrepancy between the description of the term ‘Indigenous Tanzanian Company’ in the Local Content Regulations and the contrasting interpretation of the term ‘local company’ in the Mining Act, Cap 123, R.E. 2019.
The Amendment Regulations have also introduced other stringent compliance aspects, such as the 14 days’ timeframe for submitting quarterly performance reports to the Mining Commission and the penalty imposed for failure to submit the quarterly and annual performance report within the required timeframe.