Tanzania - Mining Tanzania-Mining
Overview
Tanzania is endowed with vast quantities and types of resources whose extraction has been central to the country’s economic growth. Mining is one of the leading sectors in Tanzania, with the value of mineral exports increasing each year. Leading minerals include gold, iron ore, nickel, copper, cobalt, silver, diamond, tanzanite, ruby, garnet, limestone, soda ash, gypsum, salt, phosphate, coal, uranium, gravel, graphite, sand and dimension stones. The United Kingdom is the largest foreign investor in this industry in Tanzania followed by India, China, Kenya, USA, Netherlands, South Africa, Canada, Germany and Oman.
Tanzania is the 4th largest gold producer in Africa after South Africa, Ghana and Mali. The mining industry has experienced an estimated 8.5% growth in 2017 to stand at an estimated valued of US$ 960 million, compared to last year’s growth of 3.09% and a value of US$ 880 million. One of the largest mining companies in the country, Acacia Mining which operated in Bulyanhulu, Buzwagi and Northern Mara, recently announced a projected 40% year on year (y-o-y) increase in gold output in 2017 which is expected to bring about a 3.6% growth in the sector. However, the forthcoming closure of its Buzwagi Gold Mine operations is predicted to affect the market growth projections in the short term.
In March 2017, the Ministry of Energy and Minerals placed a ban on the export of minerals from the country. The aim was to ensure value addition of minerals produced in the country. The Tanzania Chamber of Minerals and Energy (TCME) plans to conduct an assessment on what the effects of the ban will be on the economy. For mining companies, the ban had adverse negative effects. Acacia Mining lost 30% of its revenue as well as experiencing a downward trend of its share price on the London Stock Exchange as a result of the ban. Stakeholders in the industry suggest a temporary lift on the ban of mineral ore exports, while the Government focuses on capacitating the country’s smelting capacities. In the 2017/18 budget, the Government has indicated that it will implement a 1% of value clearing fee for all minerals being exported out of the country. Clearing houses will be established at appropriate areas including airports and mining areas to facilitate the verification of minerals and collection of fees.
The mining sector is also marred with the worst form of child labor. Children working in mining are exposed to many hazards such as mercury poisoning and entrapment when tunnels collapse, especially in smaller unlicensed operations. In 2017, labor and criminal law enforcement agencies in Tanzania took actions to combat child labor. However, gaps exist within the authority of the labor ministries of Mainland Tanzania and Zanzibar that may hinder adequate labor law enforcement, including the authority to assess penalties, and the lack of publicly available enforcement data.
Minerals Production and Sales
Gold
The Tanzania Minerals Audit Authority (TMAA) 2016 Annual Report shows that Gold output (from gold bars and Copper Concentrate products) by the major gold mines increased by 4.4% from 1.36 million troy ounces in 2015 to 1.42 million troy ounces in 2016. The increase was contributed by higher gold output at North Mara Gold Mine (NMGM), New Luika Gold Mine (NLGM) and Bulyanhulu Gold Mine (BGM). Geita Gold Mine (GGM) was the leading gold producer in 2016, which contributed 34.4% of total production, while Stamigold Biharamulo Mine (SBM) was the lowest gold producer with 1.4% of total production.
Total mineral exports by these mines comprised of 1.41 million troy ounces of gold, 15.31 million pounds of copper and 0.56 million troy ounces of silver, with total value of USD 1.8 billion. Mineral royalties paid to the Government during the year increased by 8.8% to USD 71.95 million as compared to USD 66.13 million realized in 2015.
Total mineral exports in 2014 from gold bars and Copper Concentrate produced by the seven major gold mines (Biharamulo, Bulyanhulu, Buzwagi, Geita, Golden Pride, New Luika and North Mara) were: 1.27 million troy ounces of gold; 13.8 million pounds of copper; and 0.47 million troy ounces of silver with total worth of $1.66 billion, down 7.3 percent compared to $1.79 billion realized in year 2013. The decrease was mainly caused by lower metal prices notably gold during the reporting period.
Mineral Exports by Major Gold Mines (2016 versus 2015)
| 2016 | 2015* | |
| Gold Quantity (toz) | 1,405,135 | 1,368,121 |
| Silver Quantity (toz) | 557,837 | 491,805 |
| Copper Quantity (lb) | 15,309,551 | 13,240,287 |
| Gross Value (USD) | 1,796,600,140 | 1,619,162,273 |
| Royalty Paid (USD) | 71,952,964 | 66,130,711 |
Diamonds
Diamonds output at Williamson Diamonds Limited (WDL) during the year 2016 amounted to 226,599 carats, up 15.5% compared to 196,256 carats produced in 2015. The mine sold 226,899 carats of diamonds worth USD 82.18 million in 2016, and paid royalty amounting to USD 3.74 million.
Diamonds Production and Exports by WDL, 2016
| 2016 | 2015 | |
| Quantity Produced (carat) | 226,599 | 196,256 |
| Quantity Exported (carat) | 226,899 | 191,407 |
| Average Price (USD/carat) | 362.17 | 278.67 |
| Export Value (USD) | 82,175,657 | 53,339,352 |
| Royalty Paid (USD) | 3,737,310 | 2,298,144 |
Tanzanite
Tanzanite output at TanzaniteOne Tanzanite Mine (TTM) increased by 441% to 293,522 grams (Grade A-BLI and SI-I) and 1,682,330 grams (face picking) in 2016 as compared to 365,290 grams produced in 2015. The mine exported 9,216 carats of cut, 1.1 million grams of rough and 0.96 million grams of D & E grade Tanzanite worth USD 8.27 million, up by 84.6% compared to USD 4.48 million realized in 2015.
Tanzanite Production and Exports by TTM, 2016
| 2016 | 2015 | |
| Quantity Produced – Grade A – I (g) | 293,522 | 186,370 |
| Quantity Produced – Face Picking (g) | 1,682,330 | 178,920 |
| Quantity Sold – cut (ct) | 9,216 | 0 |
| Quantity Sold – rough (g) | 1,103,831 | 2,395,548 |
| Quantity Sold – D/E grade (g) | 968,821 | 0 |
| Export Value (USD) | 8,270,985 | 4,480,093 |
| Royalty Paid (USD) | 357,959 | 223,979 |
Coal
TMAA continued to monitor and audit coal production and sales activities at Ngaka Coal Mine (NCM). During year 2016, the mine produced 278,701 metric tons and sold 280,595 metric tons of coal worth USD 11.28 million. Total royalty paid to the Government was USD 338,436.
Coal Production and Sales at Ngaka Coal Mine, 2016
| 2016 | 2015* | |
| Quantity Produced (ton) | 278,701 | 255,884 |
| Quantity Sold - Local (ton) | 235,435 | 239,179 |
| Quantity Sold – Export (ton) | 45,160 | 21,449 |
| Total Quantity Sold (ton) | 280,595 | 260,628 |
| Sales Value (USD) | 11,281,203 | 11,866,894 |
| Royalty Paid (USD) | 338,436 | 356,367 |
In recent years, mineral exploration has increased in several parts of the country. The sector has attracted substantial new foreign investment in mineral development exploration, with local investment surpassing $1 billion. Recent nickel, helium, graphite, uranium and coal finds have spurred increased interest on the part of investors.
Sub-Sector Best Prospects
The mining sector depends on imported machinery and supplies, and investors can import capital goods at zero duty. There are significant opportunities for the export of U.S. technology, machinery, and services. Mining companies have significant demand for better power alternatives as they currently rely on diesel generators. The Tanzanian Government encourages mining companies to procure local goods and services whenever possible, and many of the foreign mining executives would like to increase local consumption to support the Tanzanian economy. There is significant opportunity to supply foodstuffs, clean water, training, consultancy and other services. With an unreliable power grid and rail system, alternative energy and transport solutions are also in high demand.
Opportunities
- Establishment of gold refinery activities
- Supply equipment and explosives, grinding media, mill liners, etc., under joint venture with Tanzania entrepreneurs
- Establishment of value added activities
- Gemstone cutting and polishing (lapidary). In 2010, the Government passed a new legislation banning the export of unprocessed gemstones in a bid to spur local value addition
- Rock and mineral carvings
- Jewelry manufacturing utilizing gold and gemstones
- Mineral processing industry e.g smelters
- New areas in mineral exploration
- Drilling
The major pieces of legislation governing the industry today are the 1997 Mineral Policy, 1998 Mineral Act, 2010 Mineral Act and 2017 Mineral Act which can be found on the website for Tanzania Chambers of Mines: http://www.tcme.or.tz/resources/category/acts-and-regulations
For specific information on current opportunities please contact the Commercial Section, U.S. Embassy Dar es Salaam, Email: Office.DarEsSalaam@trade.gov
Web Resources:
Tanzania Mineral Audit Agency (TMAA)
Tanzania Chamber of Minerals and Energy
Tanzania State Mining Company (STAMICO)
Southern & Eastern Africa Mineral Center
Tanzania Investment Center