Tanzania Mining Investment Attractiveness Deteriorate

The latest Fraser Institute Annual Survey of Mining Companies indicates that Tanzania dropped in the overall Investment Attractiveness Index ranking.

The survey is an attempt to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.

Tanzania’s score and rank deteriorated in 2017, dropping from 59th (of 104) in 2016 to 78th (of 91).

The survey was sent to approximately 2,700 exploration, development, and other mining-related companies around the world. Those that participated reported exploration spending of USD 2.3 billion in 2017 and USD 1.9 billion in 2016.

This year miners expressed increased concern over uncertainty regarding the administration, interpretation, or enforcement of existing regulations (+55 points), trade barriers (+50 points), and security (+47 points).

Out of 15 African countries surveyed, Tanzania ranks 12th, after Ghana, Mali, Botswana, South Africa, DRC, Namibia, Zambia, Morocco, Zimbabwe, Burkina Faso, and Ivory Coast, and just before Ethiopia, Mozambique, and Kenya,

In particular, four African countries —Democratic Republic of Congo (DRC), Ivory Coast, Tanzania, and Zambia— experienced declines in their Policy Perception Index (PPI) scores of over 20 points.

In the survey, the Manager of a mining company comments that “Legislative changes in Tanzania, which are being retrospectively applied, undermine the sanctity of contracts and remove recourse for international arbitration to resolve disputes with the government. This creates uncertainty and instability and makes for a particularly hostile investment environment.”

Meanwhile, the Senior management of an exploration company, stresses that taxation is excessive and random.

In the 1990s, Tanzania’s mining laws were relaxed to encourage foreign investments, resulting in international mining companies opening up large-scale mining operations.

However, in 2017 the government passed a series of bills aimed at increasing revenue from minerals explorations and export, including higher taxes on mineral exports and allowing the government to have a higher stake in some mining operations.