Tanzania’s mining sector is undergoing a major transformation, as outlined by Anthony Mavunde, the Minister for Minerals, during his appearance on Good Morning on Wasafi TV and Radio, November 13, 2024. His address highlighted significant achievements in the sector, backed by policy reforms and strategic investments.
With ambitious targets set for the future, these developments could have profound implications for Tanzania’s economy, shaping its revenue generation, job creation, and technological capabilities in the coming years.
A Surge in Mining Revenue
Minister Mavunde’s speech began by showcasing a remarkable increase in the mining sector's contributions to the national coffers. In the 2015/16 financial year, Tanzania collected TZS 161 billion from mining activities. Fast-forward to the 2023/24 period, and this figure had surged to TZS 753 billion. The government has set an even more ambitious target for the 2024/25 fiscal year: TZS 1 trillion in mining revenue. Impressively, more than TZS 300 million has already been collected in just the first quarter.
This remarkable growth is largely attributed to the amendments made to the Mining Act in 2017. These reforms have played a crucial role in improving transparency, strengthening sector monitoring, and creating a more favorable environment for both local and foreign investments. However, with such rapid growth, questions arise about the sustainability of this revenue and the government's ability to reinvest these funds in other critical development sectors such as infrastructure, education, and healthcare.
Fighting Mineral Smuggling with Transparency
A key point of Mavunde’s address was the creation of 43 new markets and 105 buying centers across the country. These initiatives aim to curb the rampant mineral smuggling that has undermined Tanzania’s mining revenue for years. By formalizing the trade and promoting transparency, these centers are expected to contribute to the country’s economic growth.
The government has also taken a hard stance against illegal mining, revoking the licenses of those found smuggling minerals and barring them from conducting mining activities in Tanzania. While these actions demonstrate the government’s commitment to transparency and accountability, they will need to be effectively enforced to ensure that legitimate miners, particularly small-scale operators, are not unfairly targeted.
Support for Small-Scale Miners: A Step Toward Inclusivity
The government’s renewed focus on supporting small-scale miners marks a significant shift in policy. Before 2019, miners were burdened with high taxes and fees, often paying over 30% of their earnings in various charges. In response, the government reduced these fees to 9.3%, providing much-needed financial relief. Moreover, small-scale miners who transport gold to processing plants are now exempt from royalties, leaving them with just 4% in costs.
Beyond financial relief, the government has made investments to support small-scale miners, including the purchase of drilling equipment through the State Mining Corporation (STAMICO). Furthermore, the launch of the Mining for Brighter Tomorrow (MBT) program, aimed at empowering youth and women, seeks to increase participation in mining, an often male-dominated industry. While these initiatives are a positive step forward, the true measure of success will depend on how effectively these resources reach the most marginalized miners and ensure that small-scale operations are given the tools they need to thrive.
Strategic Minerals and Global Technological Leadership
Minister Mavunde also highlighted the growing global demand for Tanzania’s strategic minerals, which are essential in modern technology and renewable energy. Tanzania is rich in resources like graphite, nickel, cobalt, lithium, and rare earth elements (REEs), which are critical to industries such as electric vehicles, renewable energy systems, and electronics.
For example, Tanzania is the third-largest producer of graphite in Africa, and with major projects underway to increase production, the country is poised to become a key player in the global graphite market. As the world increasingly shifts towards green technologies, the demand for these minerals is expected to grow exponentially. Tanzania’s mineral wealth positions it as a potential leader in this emerging sector.
However, for Tanzania to fully capitalize on this opportunity, it must ensure that it adds value to these raw materials domestically. The government has emphasized the need to establish local mineral processing facilities to avoid the country’s continued reliance on raw mineral exports. This strategy could not only create jobs and stimulate local industries but also ensure that Tanzania captures a larger share of the global value chain.
A Strong Focus on Local Mineral Processing
In line with its goals for economic transformation, Tanzania is prioritizing the development of its domestic mineral processing capabilities. One of the key projects in this regard is the establishment of a mineral processing plant in Buzwagi, where nickel from the Kabanga Nickel project will be processed. The government has made it clear that mining licenses will only be granted to investors who present a concrete plan for building processing plants within Tanzania, aligning with its policy to protect local jobs and add value to the country’s resources.
This move is crucial for creating long-term sustainable economic benefits. Processing minerals domestically will not only increase job opportunities but will also help build local industries and reduce Tanzania's dependency on exporting raw materials. However, the challenge remains in ensuring that the necessary infrastructure, skilled labor, and investment climate are in place to make these projects successful.
Emerging Opportunities: Helium and Graphite
In an intriguing revelation, Mavunde also discussed Tanzania’s vast helium gas reserves located in the Songwe and Rukwa regions. Helium, used in medical devices like MRI machines, presents a unique opportunity for Tanzania to tap into a niche market. Additionally, Tanzania is ranked third in Africa for graphite production, with a major project set to increase its output significantly. These emerging opportunities place Tanzania in a strong position to lead in both the energy and technology sectors in the coming decades.
International Mining Investment Conference 2024
Looking ahead, the upcoming International Mining Investment Conference, scheduled for November 19-21, 2024, at the Julius Nyerere International Conference Center in Dar es Salaam, will serve as a critical platform for showcasing Tanzania’s mining sector to global investors. The conference aims to bring together stakeholders from across the mining industry to share experiences and explore investment opportunities. Notably, the conference will highlight the return of global mining giant BHP, which is set to invest in Tanzania’s Kabanga Nickel project after a 15-year absence from Africa.
Conclusion
Tanzania’s mining sector is at a crossroads, with government policies signaling a shift toward greater revenue generation, transparency, and value addition. The combination of increased mineral revenues, support for small-scale miners, and strategic investments in processing infrastructure could transform the country’s economy. As Tanzania continues to tap into its vast mineral resources, its future as a mining powerhouse looks promising—provided that these reforms lead to sustained economic benefits, job creation, and global competitiveness in the years to come.
