Over the past 12 months, Tanzania’s mining sector has undergone significant changes as the government introduced a slew of new business policies, laws and regulations, all of which have had a significant impact on the mining sector’s operational landscape.
While these changes are aimed at giving the government greater control over Tanzania’s natural resources sector, ensuring that Tanzanian citizens benefit from the country’s substantial mineral wealth, they have also had a profound impact on the country’s natural resource sector and overall investment environment.
Subsequent high-profile disputes with both Petra Diamonds and Acacia Mining have exacerbated investors’ unease, and at present, foreign actors in the country’s mining industry appear to have reacted to these changes by adopting a wait-and-see approach in terms of making any new investments (Mining Weekly, 07.02.2018).
Nevertheless, this uncertainty surrounding the future operations of companies already operating in Tanzania, appears to be creating new opportunities for alternative investors, including China.
- As a result of changes to mining laws and regulations, investors face the potential renegotiations of contracts, higher tax bills and higher overall operating costs.
- While these developments are ostensibly aimed at giving the government more control over the mining industry, they have been deemed largely unfavourable to mining companies, and have seriously dented investor confidence.
- With several Western companies currently reviewing their operations in the country, China appears to be exploiting this uncertainty as a way of penetrating Tanzania’s lucrative mining industry.
- In the short-term, these regulatory changes will continue to act as detractors to foreign investment. The government’s commitment to enact real reform, and attract alternative support to enable its mining sector to truly flourish, is an equation that has yet to be fully determined.