Monthly Archives: January 2018

Tanzania’s Mining Firms Have Three Months to Comply With Law

By Beatrice Materu
23rd January 2018

In summary:

– New guidelines pushed for the mandatory listing of mining companies on the DSE by August last year as part of measures aimed at increasing transparency and sharing out wealth from the country’s natural resources.

– The rules give the government the right to oversee the implementation of these regulations, evaluate and review contracts as see fit.

– President John Magufuli has previously complained that the country is not benefiting as it should from its resources.

Tanzania is set to restructure its troubled mining sector after the government gave mining companies three months to comply with new guidelines, which give local mining firms and financial institutions preference.

Part of the regulations state:

“A contractor, subcontractor, licensee or other allied entity shall before the commencement of mining activities submit a plan to the Commission specifying the role and responsibilities of the indigenous Tanzanian company; the equity participation of the indigenous Tanzanian company; and the strategy for the transfer of technology and know-how to the indigenous Tanzanian company,”

“Mining companies will have to open and operate bank accounts in a “100 per cent” Tanzanian-owned banks.

The rules give the government the right to oversee the implementation of these regulations, evaluate and review contracts as see fit.

President John Magufuli has previously complained that the country is not benefiting as it should from its resources.

New laws

Mid last year, Tanzania’s parliament pushed for new laws on its extractives industry: The Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Bill, 2017; the Natural Wealth and Resources (Permanent Sovereignty) Bill, 2017; and, the Written Laws (Miscellaneous Amendments) Act, 2017.

The new guidelines pushed for the mandatory listing of mining companies on the Dar es Salaam Stock Exchange by August last year as part of measures aimed at increasing transparency and sharing out wealth from the country’s natural resources.

President Magufuli signed the Mining Act in July last year and it requires the government to own at least a 16 per cent stake in mining activities. The troubled mining sector generates about 3.5 per cent of the country’s GDP.

The government accused gold mining company Acacia, of tax evasion and under-declaring amount and types of minerals exported. The government banned it from exporting gold/copper concentrates, which account for over 50 per cent of the company’s operations.

Other major foreign-owned mining companies that will be affected by the new legal regulations on local content include the South African AngloGold Ashanti and British mining company Petra Diamonds.


Brazil: Gold mine case bolsters Indigenous rights in Brazil. In a political climate widely seen to privilege industry, decision to uphold the suspension of a Canadian miner’s licence is a tidal shift

The Globe and Mail
18 Dec 2017


A Brazilian appeals court has upheld the suspension of a key licence for Toronto-based Belo Sun Mining Corp., which hopes to build Brazil’s largest open-pit gold mine in the Amazon forest. The decision sets the project back at least a year, and in their ruling, the three-judge tribunal blasted the company for failing to consult Indigenous people sufficiently.

The precedent-setting ruling serves to shore up the rights of Brazil’s First Nations, rights that are, in principle, constitutionally protected, but in practice often ignored in the development of infrastructure and commercial projects. It comes at a time when the political climate strongly favours the mining industry.

The decision, delivered on Dec. 6 by the Federal Tribunal of the First Region, in Brasilia, upholds an April suspension order for the company’s installation licence. The tribunal said that Belo Sun had failed to fulfill obligations, repeatedly made clear after previous court challenges, to study the impact of their planned 175,443-hectare open-pit mine on the Juruna people, who live approximately 10 kilometres downriver from the site of the Volta Grande project, and must do so according to a “consultation protocol” laid out by the Juruna themselves.

“This is a very important decision, not just for Belo Sun – it tells all Brazil that Indigenous people have to be consulted on projects, public or private,” said Ubiratan Cazetta, one of the federal prosecutors who brought the case.

Ian Pritchard, Belo Sun’s chief operating officer, said the company has not made a decision about whether to appeal and that their “current focus is to complete the work with the government agencies.” He added that the company would not comment on the decision, saying only that “the Para government and local municipalities have been very supportive of our company and the Volta Grande Project.”

The mine, called Volta Grande, is located on a 2,000-km tributary of the Amazon River called the Xingu, in the state of Para. The state has vast mineral riches, but one of Brazil’s lowest standards of living and has wooed national and international mining companies, promising to smooth the path of bureaucracy and licensing. The municipality that is home to the mine has also welcomed its promise of 500 jobs and a big bump in tax revenue. Federal agencies – particularly those responsible for environmental and Indigenous affairs – have been less positive.

“Belo Sun weren’t expecting this result – they believe our institutions don’t work,” Mr. Cazetta said. “They have this discourse about how, ‘We are making things better for these people; the Indigenous are so poor and we are bringing progress,’ that they think will convince everybody, and then they will be allowed to do whatever they want. But we are in a different moment in Brazil.”

In a report on the ruling for CIBC World Markets Inc., analysts Jeff Killeen and Daniel Gavin called it a “negative event for the project” and said “the timing for a resolution is unknown.”

The tribunal ruling contains a landmark instruction for Belo Sun to follow the consultation protocol defined by the Juruna people. In it, they define themselves as the “guardians of the Xingu,” who have survived centuries of incursion on their way of life in the name of development. They insist they must be consulted “in good faith and honestly” about projects that will affect them, on their terms – at meetings held on their timetable, in their community, with the participation of children, adults and the elderly, with decisions to be reached by consensus, after as many consultations as it takes to answer all their questions.

The ruling obliges Belo Sun to redo studies of possible impacts on the Juruna and Arara peoples, who say their lands are located 9.5 km and 13.7 km, respectively, from the mine site. The company has repeatedly argued that the nearest Indigenous territory is 11 km from the mine, and so outside a 10-km radius of impact established by federal law.

Mr. Cazetta said the judges on the tribunal were not interested in haggling over whether the mine is 9km or 11 km away from the Indigenous land. “They said, ‘Let’s be serious, your project puts pressure on them; it’s easy to see this.’”

In addition, the mine is 13 km downriver from the massive Belo Monte hydroelectric project, which has been the site of one of the uglier conflicts between Brazil and its Indigenous people. Brazil’s supreme court allowed construction of the dam, which will flood more than 500 square km of land, despite the fact that it was bitterly opposed by First Nations groups who live in the area and who were never consulted.

The dam has already drastically changed water levels and the behaviour of the Xingu river on the Juruna territory and it will be at least another seven years before its full impact is known, said Biviany Rojas, a lawyer for the Socio-Environment Institute, a non-government organization that has been supporting the Indigenous people in their fight against Belo Sun.

That was one factor the judges considered when they ordered broader consultations. A second issue, in the background, was the Samarco mine disaster in southeastern Brazil two years ago, where an open-pit tailings dam collapsed, killing 19 people, destroying a town and releasing a tide of toxic sludge whose reach extended hundreds of kilometres. In the post-Samarco context, Ms. Rojas said, an argument over whether a mine is 9 km or 11 km away from an Indigenous community “is absurd.”

Marcelo Ribeiro Tunes, a director with the Brazil Mining Association, an industry lobby group, said that he believes Belo Sun must appeal the ruling to the Supreme Court. “Our feeling is [the tribunal judges] are overreaching their authority and the spirit of the law – tomorrow, they will say the distance [within which a mine is responsible for impact] is 20 km, then they will say 100 km.”

The mining industry has been enjoying a warm relationship with government since Brazilian President Michel Temer took power 16 months ago. Two new bills, one of which reduces royalty levels and another which relaxes regulatory procedures, are expected to become law as early as next week. Mr. Temer has called the moves necessary to spur foreign investment and help revive Brazil’s economy, which is emerging from one of the worst recessions in nearly a century. In August, he introduced legislation to permit mining in a 28,700-square-kilometre reserve (about the size of Denmark) called Renca, in the northeastern Amazon. He was forced to withdraw the proposal after a global outcry, but another five million hectares of the rain forest are the subject of bills before congress seeking to change their protected status to allow mining.

Mr. Tunes said the licensing situation remains complex: By local standards, Belo Sun has had a comparatively fast process, he said with a laugh. But he does not believe this tribunal ruling will dampen prospects to expand the industry. “If you have a new project, you may think twice about coming in,” he said. “But if you have a very good mining deposit, you will take the risk.”

In the Amazon region itself, public opinion of mining is split between people who fear the environmental impact, including the deforestation that accompanies the mines, and those who see them as vital economic progress. While the federal government clearly supports the pro-development view, courts are increasingly ruling in favour of Indigenous peoples. Canadian-owned Brazil Potash Corp., for example, lost its licence for a mine in Amazonas state in July, 2016, when a court ruled it had not sufficiently consulted Indigenous people in the area.
In a bizarre incident in late November, a group of academics meeting at the Federal University of Para, in the state capital of Belem, to discuss the potential impacts of Belo Sun’s project were locked in a hall by the mayor of the municipality where the mine is located and a group of about 40 mine supporters. Those who were detained – for about 40 minutes – have filed a complaint with federal prosecutors, saying the mayor threatened them with violence.