SPEECH BY MR. ALLY BONDO SAMAJE, THE ACTING COMMISSIONER FOR MINERALS (TANZANIA) DELIVERED AT THE NATIONAL CONFERENCE ON MINERAL, OIL AND GAS SECTOR GOVERNANCE ON 5TH SEPTEMBER, 2012.

The Acting Commissioner for Minerals in the Ministry of Energy and Minerals, Mr Ally Bondo Samaje

BLUE PEARL HOTEL, UBUNGO PLAZA

Distinguished Participants;

Ladies and Gentlemen;

First and fore most, I wish to thank HakiMadini, Policy Forum and the Interfaith Committee on Economic Justice and Integrity of creation for organizing this very important conference on mineral, oil and gas Governance. I further thank you for allowing me to stand in front of you to give a keynote speech in regard to this event which I believe will provide good opportunity for the participants to share experiences and views in regard to resources extraction.

Distinguished Participants;

Ladies and Gentlemen;

Let me start my speech by sharing with you on mining sector. We all experienced mineral exploration boom in 1990s, most of the exploration activities concentrated on gold in particular. This was further facilitated by the establishment of the Mineral Policy of 1997 followed by the enactment of Mining Act of 1998.  This move resulted into the commissioning of large scale gold mines we have today.  However, of recent years we have experienced diversification in mineral exploration from gold to other minerals such as uranium, coal, base metals, Rare Earth Elements (REE) and Platinum Group Metals (PGM).  This has resulted into more discoveries of uranium, nickel and Rare Earth Elements making a possibility of having large scale mines for those minerals. Apart from minerals, Tanzania has also oil and gas potentials.

Distinguished Participants;

Ladies and Gentlemen;

Mining sector is supposed to contribute to over 10% of GDP by the year 2025. Currently the contribution of mining sector to GDP is at 3.3% (2011).  However, the 10 years implementation of Mineral Policy of 1997 (1997 to 2007) revealed some challenges which made the country to change the mineral policy. These challenges include the following:

 i.        Low level of integration of the mining industry to the rest of the economy, rendering the mining industry as enclave of its own;

  ii.        Low and slow growing contribution of the sector to the GDP as compared to the growth rate of the sector (sector growth from 7.7% in 1997 to 10.7% in 2007 while sector contribution grew from 1.4 % in 1997 to 2.7% in 2007). The current sector contribution to GDP is 3.3% (2011);

  1. Low level of mineral value addition activities as minerals mined were exported in raw form;

 iv.        Slow development of small scale mining;

   v.        Low capacity to administer mineral sector;

 vi.        Growing conflicts between mining projects and communities living around these projects that are mainly centred on insufficient compensation, relocation and resettlement schemes of communities that were originally artisanal and small scale mining communities before start of the large scale mining projects; and

  1. Growing negative public perception on mining, because of high expectation by the people that mining would provide direct benefits from the development of the mining venture in a shortest possible time.

Distinguished Participants;

Ladies and Gentlemen;

 

To respond to the above listed challenges, the Government reviewed the Mineral Policy of 1997 which resulted into the establishment of Mineral Policy of 2009, followed by the enactment of the Mining Act 2010. This process was performed by making sure that the international competitiveness in attracting more investment to our country is maintained, the interests of private sector investment that was already established over this period is safeguarded on the other hand addressing the general public concerns over the management of the nation’s mineral wealth.

 

Apart from the Government remaining as regulator, facilitator, service provider and promoter of private sector investment in the mineral sector it is now made possible under the same policy and legal regime the Government to participate in mining projects. Due to this, efforts are being made to strengthen the State Mining Corporation (STAMICO) to actively engage in mining sector on behalf of the Government.

Currently, STAMICO owns various exploration projects either at 100% ownership (potential for partnership) or under joint venture agreements. Some of the projects are at an advanced stage such as the Buckreef Gold Project located in Geita Region whereby STAMICO owns 45% stake and the balance is owned by private company, Tanzania American International Development Corporation 2000 Limited. Also, STAMICO provides consultancy services and drilling services after acquiring two new drill rigs.

Distinguished Participants;

Ladies and Gentlemen;

As already mentioned small scale mining is another area that has been emphasized in mineral policy of 2009. The Government has been trying to address the main challenges hindering the development of small scale mining. Small scale miners are faced by lack of skills, technology, financial resources and modern equipment. The government is establishing a loan scheme under coordination of STAMICO for small scale miners that will involve Tanzania Investment Bank (TIB) and other stakeholders where necessary. This will be a revolving fund in order to be sustainable and allow more small scale miners to access the loan in the long run.

Furthermore, the government will continue to demarcate areas suitable for small scale mining from relinquished areas during renewal of Prospecting Licenses as stipulated under section 15 of the Mining Act 2010. The aim is to formalize small scale operations so that they can easily be financed. However, small scale miners are encouraged to form groups so that they can easily qualify to access financial support from financial institutions or from capital market. We encourage the financial institutions and other stakeholders to support and collaborate with the Government in development of small scale mining.

Distinguished Participants;

Ladies and Gentlemen;

The Government will continue increasing its effort in supporting small and medium mining enterprises to make sure that the local content in mining increases. This will increase local participation, local beneficiation and value added as well as strengthening economic linkages. The Government is working proactively to ensure a win-win situation. Benefits from mining should not always be seen in terms of royalties or taxes, but in a wider socio-economic spectrum in which local content (economic linkages) brings more benefits than tax based benefits, which can results into the so called Dutch disease.

The Ministry is implementing the Sustainable Management of Mineral Resources Project, whose main objective is to strengthen the countries capacity to manage the mineral sector through various interventions as stated earlier. Tanzania Extractive Industries Transparency Initiative is also being implemented at the ministry to ensure more transparency and good governance in the mining and petroleum sectors.

Distinguished Participants;

Ladies and Gentlemen;

May I breifly talk on oil and gas activities. Tanzania has so far made discoveries of two natural gas fields, Songo Songo (discovered in 1974) and Mnazi Bay (discovered in 1982). Production of gas from Songo Songo started in July 2004, and is being used for electricity generation as well as for thermal applications in 37 industries in boilers, kilns and furnaces. Plans are underway to supply natural gas for households and vehicles. The Songo Songo gas field is estimated to contain 1.6 (tcf) of natural gas while Mnazi Bay is estimated to stock in excess of 4 tcf. The other 5 discoveries namely Mkuranga, Kiliwani-1, Pweza-1, Chewa-1, and Chaza-1 are under appraisal programmes.The three fields recently discovered by Ophir/BG in the deep water offshore have an estimated potential of 7 trillion cubic feet (tcf).

Through Support and Agreement between Tanzania and China, a 532 km, 36 -inch pipeline will be constructed from Mnazi Bay, Mtwara to Dar es Salaam via Somanga Fungu. The maximum capacity of the pipeline is 286 bcf/year, which is sufficient to meet thermal and electricity demand of up to 3,900 MW.

Presently, more effort is being put on policies and legislations on oil and gas which are at different stages of preparations prior to approval. However, the guiding principles are: the use of resources to create lasting benefits to society; efficient resource management; Transparency and accountability; Competitiveness and productivity; Protection of the environment and conservation of biodiversity; and Co-operation among stakeholders.

Distinguished Participants;

Ladies and Gentlemen;

Let me conclude by saying that, the Government policies on energy and minerals will continue emphasizing on sustainable development and growth in a win-win situation. The minerals and Energy sectors are the key economic sectors in Tanzania. It is important that we increase the socio-economic benefits of these sectors in the country by creating more positive partnerships between Government, Industry and local communities to ensure sustainable development. This requires understanding, transparency, trust and honesty. In this regard, the civil society and other stakeholders have an important role to play.

THANK YOU FOR YOUR KIND ATTENTION

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