ICMM - International Council on Mining & Metals

NEWS

05.06.09
Mining in Tanzania - at a watershed

Mining in the country is at a very important watershed – the decisions made in the next few months could extend or halt the impressive progress of the sector since the last major reform of mineral policy in the late 1990s.

This was the high level message from a workshop held in Dar on 19 May and attended by senior representatives from 14 government agencies and the main mining companies, and informed by a number of independent international researchers and other authorities.

The workshop was organized by the Tanzanian Chamber of Minerals and Energy in conjunction with the International Council on Mining and Metals (ICMM). It was opened by the Chief Secretary, Mr Philemon Luhanjo, and closed by a speech by the Minister of Mines and Energy.

While the private-sector friendly polices pursued by governments since 1995 have produced a nine-year bonanza for the country (according to recent UNCTAD data this has made Tanzania the largest non-oil recipient of foreign direct investment in Africa after South Africa), the very rapid growth of this new industry has come at a price: tensions within the country and local communities around mining are huge and damaging.

This was evident even within the workshop. Some government officials claimed that mining companies were not doing enough in their local communities.

Company representatives refuted this and gave examples of leading edge training and other social programs, as well as offers of support to government that had been ignored.

The workshop learned that the planning horizons and the gestation periods associated with a typical mine and its payoffs are extremely long.

The many uncertainties associated with these long gestation periods generate large commercial risks for all major mining projects. Political and regulatory risks represent a potentially additional – but avoidable – risk factor that is bound to impact commercial investment decisions. 

On the other hand it was noted that the nation generally and local communities in particular expect to see a broad and speedy set of economic and social benefits to justify the tapping of a precious national resource such as gold.

When these benefits fail to materialise quickly, or employment is smaller than expected the result can be toxic:  irritation on both sides, physical conflict in some cases and above all strong political pressures to find quick fixes to try to generate quicker gains for at least some stakeholders.

The short time horizons of most governments will often intensify these pressures at the political level.

Several of the workshop participants subscribed to the view that these short-term gains had to be achieved in greater measure. ICMM’s extensive analysis of this problem internationally shows that Tanzania is by no means unique in facing these tensions.

Participants broadly agreed that there is now a major agenda of work urgently needed to define the local economic development and other community partnership programmes that will help to ensure that the positive examples illustrated by international experience are replicated in Tanzania.