THE UNIVERSITY OF DODOMA

COLLEGE OF EARTH SCIENCE.

SCHOOL OF MINE AND PETROLEUM ENGINEERING.

DEPARTIMENT OF MINING AND MINERAL PROCESSING ENGINEERING.

GROUP ASSIGNMENT

COURSE INSTRACTOR: MR. MADUHU

MN 411. MINERAL ECONOMICS

STUDENT NAME: REG. NO:

MDETE TITO M. T/UDOM/2014/06014.

MPEMBA, PETER SADALA. T/UDOM/2014/05999.

MSHANI, OBADIA T/UDOM/2014/05996.

DANISTAN, JASTINE J. T/UDOM/2014/06016.

GEORGE, RASHID PASCAL. T/UDOM/2014/05988.

 NATIONAL MINERAL POLICY.

The national mineral policy of Tanzania is formulated with the aim of promoting socio-economic
development within our country. The government of Tanzania recognizes the need to put into
place internationally competitive investment environment for the mineral sector. The first
national mineral policy was formulated in 1997, and the government’s vision and mission was to
have a strong, efficient and profitable mining industry for the benefit of the Tanzanian people. It
is envisaged that the mineral sector should contribute significantly towards industrial
development, employment creation, social and economic infrastructural development particularly
for the rural areas, income generation, foreign exchange earnings and government revenue.

The implementation of national mineral policy formulated in 1997 witnessed a number of

achievements from 1997 to 2007, which includes the following:

o Increased Foreign Direct Investment (FDI) in the mineral sector from US$1.3 billion to
US$ 2.5 billion through exploration and mining projects,
o Increase in the value of mineral exports from US$26.66 million toUS$1,003.21 million,
o Growth of the mineral sector from 7.7% to 10.7% (at 2001 prices);
o Increase in the contribution of the mineral sector to the gross domestic product (GDP)
from 1.4% to2.7% (at 2001 prices).
o Increase in employment in large scale mines from 1,700 to 13,000workers;
o Increase in the contribution of the mineral sector to the GDP from 1.4% to2.7% (at 2001
prices) and
o Commissioning of six large scale gold mines which produce an average of 50 tons of
gold compared to less than 1 ton, which was produced by small scale miners. In addition,
a medium scale tanzanite mine producing an average of 1.4 million carats per annum
was commissioned in 2002.
Although the national mineral policy of 1997 was lead to the above achievement’s but still
mineral sector facing many challenges such as low integration with other sectors of the
economy, low contribution to the gross domestic product (GDP) compared to other sector
growth, slow development of small scale mining, low capacity of the Government to administer
the sector, low level of value addition of minerals, and environmental degradation. National
mineral policy of 2009 was formulated after the evaluation results that was conducted during ten
(10) years of implementation of national mineral policy of 1997. National mineral policy of
2009 aims to strengthening integration of the mineral sector with other sectors of the economy,
improving economic environment for investment, improving the legal environment, developing
small scales miners, strengthening capacity for administration of the mineral sector, maximizing
the income from mining, strengthening environmental management, and promoting and
facilitating the value additions to different minerals. However, the government will remain as a
regulator and facilitator of the mineral sector, promoter of private sector investment in mineral
sector and will participate effectively and strategically in different mining projects. So in order
to accomplish the above objectives and to contribute to the achievement of the national
development vision 2025, the government will continue to give priority to the mineral sector in
the strategy for growth and reduction of poverty.

MISSION AND VISION OF MINERAL POLICY OF 2009.

In order to guide the government and stockholders of different mining industry in the
management of the mineral sector on a suitable basis; mineral policy of united republic of
Tanzania provides a written declaration of the frame work of policies objectives and statement
concerned with management of mineral sector. The nation mineral policy is based on the
following mission and vision.

MISSION.

“To set policies, strategies and laws; regulate mineral exploration, production, trading, value
addition and mineral actors for sustainable development of mineral resource; and integrate with
other sectors of the economy”.

VISION.

“Effective mineral sector, contributing significantly to the acceleration of socio-economic

development through sustainable development and utilization of mineral resources in Tanzania
by 2025”.
 ORGANIZATIONS WHICH PARTICIPATING IN MINING SECTOR AND THEIR
FUNCTIONS.

There several organizations hire in Tanzania which have different functions in mining sector;
below are some of organizations which participating in mining sectors and their respectively
functions:

o TAWOMA (Tanzania Women Miners Association):

TAWOMA is the abbreviation of Tanzania Women Miners Association. This is the heart of
networking among all women miners regarding areas of minerals and mining in looking for
Investors, Marketing in the country and oversea, and trading in general.

o TCME (TANZANIA CHAMBERS OF MINERALS AND ENERGY)

This organization was established in 1994, the Tanzania Chamber of Minerals and Energy
represents the interests of its members in the Tanzanian mineral sector. Acting as a voice for the
industry and plays a pivotal role within the sector as a mediator between the mining investment
community and key stakeholders, most notably the Government of Tanzania and the public.

o SME: is the abbreviation of small and medium-sized businesses whose personnel

numbers fall below a certain limit.

The functions of these organizations in mining sector are:

o Networking among miners regarding areas of minerals and mining in looking for
Investors, Marketing in the country and oversea, and trading in general for example
TAWOMA
o Creating favorable environment for its members in relationships BETWEEN SMALL
AND LARGE-SCALE MINERS.
o Some of members attends several seminars and training courses concerned with
entrepreneurship, identification of minerals, health and safety, use of mercury,
environmental conservation and management skills.
THE SIGNIFICANT OF THE MINING INDUSTRY IN THE ECONOMY OF TANZANIA.

Tanzania is blessed with a wide range of minerals which should translate to a big boost to the
country's economy and our people's quality of life. Those minerals including metals, gemstones,
industrial mineral, energy minerals. The mining industry is an instrumental part of the Tanzanian
economy, still large quantity of mineral natural resource is to be exploited, significant of mining
industry continue to be so for a considerable period of time due to presence of quantity of natural
resource which not yet exploited. The Significant of the Mining Industry in the Economy of
Tanzania is in a variety of means including the following:

Revenue generation: Mining companies pay taxes, duties and royalties more than Tsh250 billion
every year. These revenues can be invested in public service provision, such as healthcare,
education and infrastructure.

Job creation: The mines create employment opportunities both directly for the mining companies
and also indirectly throughout the Tanzanian economy thanks to the demand created by the
industry’s presence. For every job created by a TCME member company, a further six jobs are
generated thanks to the multiplier effect. Long-term benefits are also accrued through training of
employees and in some cases, skills training of local community members.

Creation of new business opportunities in local communities: Mine sites generate new business
opportunities in the local communities, particularly in providing services to the mine community,
such as agriculture for food and textiles for clothing. TCME member’s source materials, services
and supplies from Tanzanian companies, invest in Tanzanian infrastructure and pay wages to
Tanzanians who spend more money in the local economy.

Improved infrastructure: Mining operations require infrastructure in the form of roads, power
and water. This infrastructure is frequently also made available to local communities, improving
livelihoods.

Extensive corporate social investment (CSI) programmes: Our members have comprehensive
CSI programmes which benefit Tanzania and local communities in a number of ways, whether it
is environmental conservation, education, or healthcare provision.
Creation and support of international investor relationships: The activity of the mining sector in
Tanzania has attracted investor attention and financial flows into the country thus encouraging
continued and increased investment in the economy.

CONTRIBUTION TREND OF MINERAL SECTOR TO THE TANZANIA ECONOMY AND

ITS POSITION IN ECONOMY OF THE COUNTRY AFTER 20 YEARS FROM NOW.

Mining dates back in Tanzania to the pre-colonial era when Arabs and local traders mined and
sold the country’s resources including gold, copper, iron and salt. The first commercial mining
for gold was undertaken surrounding Lake Victoria under German colonial administration in
1980s. The estimated total minerals mainly gold and mica produced 34 years of German
administration (1884-1918) was between Tsh 7 million and Tsh 10 million.

Following independence in 1961 the mining sector was increasingly brought under the direct
control of the state and public institution such as National Development Corporation and
STAMICO. It was not until the late of 1980 that the government embarked upon a process of
privation and liberalization. In 1990s the government of Tanzania created the investment
promotion center under the investment promotion policy, following which the mining industry
began to expand and attract international investors, Government effort to undertake a mineral
sector restricting Programme to encourage and promote private sectors led development in
partnership with accumulated geological data reveling that Tanzania’s diverse mineral resources
base and potential has strengthened considerably and legislation in 1997 and 1998 reinforced
this trend.

After the policy of 1997 the government introduced also the system of mining license due to
increase of foreign investors mostly area of the opening which was issued between 2000 and
2007. The table below it show the increase of mining license from 2000 up to 2007.
After mining licence system being introduced the mineral sector in case of economy has been
increased, Tanzania is being benefiting from large scale mining particularly risen from
insignificant gold producer in gold mining early 1990s to become the third largest producer in
Africa after South Africa and Ghana. Also the table below show the contribution of mining
sector to the country in different aspects from 2002 up to 2007.

From the table above we can observe that the trend of contribution of mining sector to the
country increases year after year.

Also following the mineral policy of 1997 which saw many investors entering to the sector the
economy of Tanzania started to rise. In which the export earnings from 1997 which was average
of one (1) percent was increased up to 52% in 2013. Also directly employment was increased
from 1700 in 1997 up to 15000 in 2013 (MoEM 2015). After the performance of mining sector
from 1997 up to 2009 the government introduced new policy in 2009 and mining act in 2010 in
which due that changes of mining policy and mining act of 2010 the government undertook a lot
of reforms in the tax system in which the total tax revenue has increased after the policy of 2009
and mining act of 2010 in which the total tax revenues from 2.41 percent in 2001 up to 4.41
percent in 2014 even during the period where commodity prices were falling.

According to the prospecting done reveals that some 130.2 million’s tons of gold are present in
Tanzania. Apart from gold there are also considerable reserves of gemstone like diamond,
emerald, ruby, sapphire, tanzanite etc. Other minerals are iron about (8.5million tons), coal about
(324 million tons), magnetite (4.5 million tons), nickel (40.4millions tons) and soda ash (1.0
million tons).

Tanzania has the ambition to make the mining industry to account for 10% or more of gross
domestic product (GDP) by 2025. Figure below illustrates the current trend for gold mined in
kilogram (Kg) from 1990 to 2000 and in case of diamonds the evolution is quietly similar.

(Campenhout, 2002)

For the fuels, natural gas reserves are estimated to be 2 trillion cubic feet. The government is
working closely with the World Bank to develop the Songosongo gas fields off the Southern
Tanzanian coast and in the Mnazi Bay area, with a view to substituting expensive imported
petroleum fuels. The Songosongo gas-to-electricity project will have a ready market of 17
potential industrial users of natural gas in the Dar-es-salaam area.
Furthermore, the study has revealed that there has been a lot of capacity building initiatives
intended to improve capacity of government officials to negotiate mining contracts and monitor
compliance with taxation law. The study also reveals that Tanzania Revenue Authority has also
tried to effective regime as far as prevention of transfer pricing is concerned by coming up with
transfer pricing guidelines to curb leakages illicit financial flows.

So according to this trend, minerals sector in Tanzania for the 20 years coming will be more
developed due to its trend being growing every day also due to emergency of new of
technology which makes the mining operations to be easily and availability of facilities which is
required for the mining operations.

In case of the economy of the country , due the development of this sector every year and the
contribution of Tax from mining industries to the government it leads the economy of this
country to increase as we seen that the total tax in 2001 was 2.41 percent and in 2014 the total
tax was 4.41 there was increase in 2 percent for 13 years so from today up to 2038 we expect that
there will be increase in total tax it may be ranging in 9.1 percent, This will be total tax from the
mining sectors to the government in 20 years coming due to trend of this sector to grow every
year.

Also, as we seen that Tanzania have the ambition to reach 10 percent or more of gross domestic
product (GDP) up to 2025 this mean that from to today up to 2025 it is about 7 years to go so in
seven years coming the government want to make 10 percent or more, what about 20 years
coming? This mean that up to twenty years coming the government can make up to 25 percent or
more of gross domestic product (GDP) to the economy of the country from this mineral sector

But in other side the contribution of this sector to the economy of Tanzania may be low in 20
years coming because some of the mining industries like Buzwagi will have reach its end so the
amount of tax in which this company paying to the government will be no longer exist and leads
to decrease of the income to the government.
CONCLUSION

Mining industry in Tanzania still not much contribute in socio – economic development of the
country. There is a need of cross check up of current policy (2009), if possible formulation of
new policy should be done, so as to increase speed on contribution in GDP. Suggestion on new
policy to be made is that there should be direct participation of government in mining sector in
case of ownership. The policy should state the ability of government to own many mines as
possible fully or with flagship with other investors through governmental organization such as
NDC, STAMICO etc. so as to help government to get income not only from tax but also from
profit made. Also, to meet national development vision 2025, amount of mineral exported should
be less to enhance internal industry growth through the use of raw materials mined within the
country.
References
Campenhout, B. V. (2002). The Mining Industry and the Future Development of Tanzania. DAR
ES SALAAM, TANZANIA: ESRF.

The Extractive Resource Industry in Tanzania: Status and Challenges of the Mining Sector.
(2009). Regional Office for Eastern Africa: Society for International Development .