This legal update analyses the recently published Mining Act (Mineral Rights Applications by Tender) Regulations, Government Notice Number 484 of 2020 (the Tender Regulations) and the Mining (Lapidary) Regulations, Government Notice Number 485 of 2020 (the Lapidary Regulations).
The Tender Regulations
The Tender Regulations set out the process for invitation and application by way of tender for prospecting licences, mining licences and special mining licences. Applications are subject to the Minister of Minerals' (the Minister) power to designate a vacant area for that purpose.
- Invitation of tender application: an invitation to apply for mineral rights by way of tender is initiated by the Minister through publication in the government gazette or local newspaper.
- Application: interested persons must apply to the Mining Commission (the Commission) using Bid Form No. TBF 1 prescribed in the First Schedule to the Tender Regulations. The form must be submitted in duplicate and accompanied by a non-refundable fee of TZS 500,000 (equivalent to USD 216).
- Submission of bid documents: the Minister or the Commission shall invite applicants to submit their tender bid documents. The invitation is made through a letter providing for the time and place to submit the bid documents. The bid documents shall be submitted within the time specified and in a sealed envelope addressed to the Commission but without disclosing the identity of the bidder. The bid documents must also include the contact of the bidder, nationality, application number, premium amount bided, schedule of payment, training and work programme, and proof of financial and technical resources.
Upon submission, the date and time of receipt of the bid documents will be registered by the Commission or any other person authorised by the Commission to perform licensing activities.
- Tender opening meeting: the Commission will prepare a tender opening meeting, inviting attendance of all bidders. The Executive Secretary 1 shall appoint an ad-hoc Evaluation Committee (EC) that is tasked with opening, evaluating and preparing an evaluation report (the report) of bid documents.
- Recommendations: the report will contain the EC's recommendation of the bidder who should win the tender and will subsequently be submitted to the Executive Secretary.
- Notification letter: the Executive Secretary will issue the applicants with a letter, notifying them of the successful and unsuccessful bidders.
- Complaints and appeals: an unsuccessful bidder who is aggrieved by the decision of the Commission may submit a complaint to the Executive Secretary. The complaint must be submitted within seven (7) days after receiving the notification letter. The unsuccessful bidder may appeal to the Minister if dissatisfied with the decision of the Executive Secretary. The Minister shall decide the appeal within fourteen (14) days from the date of receipt. The decision of the Minister is final and the Tender Regulations do not provide an avenue to challenge it.
The Tender Regulations also provide for circumstances where applications for mineral rights are made for the same area and on the same date. In such a case, the Commission will have to notify the applicants of that fact and allow them to submit a proposal on a premium for the area applied for as well as a payment schedule. The applicant with the highest premium will be the successful bidder. The successful bidder must comply with the payment schedule otherwise the person with the second-best premium will be considered.
The Lapidary Regulations
Lapidary activities are defined under the Lapidary Regulations to mean engraving, cutting, or polishing of stones and gems, or enhancing gemstones through heat treatment for value addition. The Lapidary Regulations provide application requirements for obtaining lapidary licences. There are two (2) categories of lapidary licences; Small Lapidary Licence (SLL) and Large Lapidary Licence (LLL) which only apply to gemstones 2.
This licence specifically targets Tanzanians and cannot be granted to foreigners 3. An application for a SLL is made to the Commission through Form No. SLL.1 (in duplicate), accompanied by the prescribed fee and a commitment statement. The applicant must have three (3) lapidary machines to carry on lapidary activities – this has to be indicated in the commitment statement. The prescribed fee for a SLL application is TZS 50,000 (equivalent to USD 22).
A successful applicant will be granted a SLL which is valid for twelve (12) months and which shall expires on 30th June of every year. A SLL may be renewed not less than one (1) month from the expiry date.4 A renewal application is submitted to the Commission through Form No. SLL.3 (in duplicate). The renewal fee is TZS 50,000 (equivalent to USD 22) and the annual fee is TZS 200,000 (equivalent to USD 87).
An LLL may be issued to both Tanzanians and foreigners, subject to varying requirements. The prescribed Form No. LLL.1 is used for the application which must be submitted to the Commission (in duplicate) together with a fee of USD 200 and a commitment statement. In the commitment statement, if the applicant is a Tanzanian, possession of ten (10) lapidary machines must be indicated. For a foreigner, the commitment statement must indicate possession of thirty (30) lapidary machines.
An LLL is valid for five (5) years from the date of issue, subject to renewal. The renewal must be done not less than six (6) months from the expiry date 5. In this case, the application is made to the Commission through Form No. LLL.3 (in duplicate), and payment of the prescribed fee of USD 200. The annual fee for a LLL is USD 1,000.
Applicants for both a SLL and LLL must possess knowledge and experience in lapidary activities. Applicants will not be granted lapidary licences if they have not surrendered a prior licence, were disqualified from holding such licence or have been convicted of a criminal offence related to lapidary activities.
General provisions for both SLL and LLL
A SLL and LLL can be terminated by the Commission upon failure:
- to conduct lapidary activities within three (3) months from the date of grant;
- by the holder of a LLL to transfer skills to Tanzanians;
- to keep records and accounts and refuse to produce the same to the Commission;
- by the holder of a LLL to pay annual fees three (3) months from the due date; and
- to carry out lapidary activities within the described premises.
Holders of a SLL and LLL (Licensees) must maintain accurate records for the duration of their respective licences at their registered offices or the place where lapidary activities are conducted.
Licensees may surrender their licences by issuing a one (1) month notice to the Commission and paying rent and fees that are due under the Lapidary Regulations.
The Commission shall forfeit gemstones obtained or machines involved in unauthorised lapidary activities and subject them to auctioning.
Offences and penalties
The Lapidary Regulations set penalties for individuals and companies that will not adhere to its provisions, produce incorrect, false or misleading information, and who will obstruct the Commission or an authorised officer from performing his duties.
An individual shall be liable to a fine not exceeding TZS 50,000,000 (equivalent to USD 21,737) or imprisonment for a term not exceeding twelve (12) months, or both. A company will be subjected to a fine not exceeding TZS 100,000,000 (equivalent to USD 43,474).
1 The Executive Secretary is the Chief Executive Officer of the Commission who is appointed by the President to supervise, manage and carry out directives thereto, section 24 of the Mining Act, Cap 123 Revised Edition 2019 (the Mining Act).
2 Gemstones include, among others, diamonds, ruby, tourmaline and tanzanite.
3 Section 86J (3) of the Mining Act.
4 Section 86K of the Mining Act.
5 Section 86F of the Mining Act.
Originally published by Clyde & Co, August 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.