Tanzania Mining Deals: 30 Questions Investors Keep Asking Before They Commit Capital

Tanzania Mining Deals: 30 Questions Investors Keep Asking Before They Commit Capital Tanzania’s mining sector is booming with increased investor interest in a wide selection of minerals especially gold, precious metals and critical minerals. Whilst investor interest is strong, many deals slow down because basic legal questions are not answered early. Here are the top 30 Q&A to assist investors looking to invest in the mining sector in Tanzania. A. Entry and investment structure 1. Can a foreign investor directly hold a mining right in Tanzania, or must it invest through a Tanzanian company? A foreign investor may, through a Tanzanian registered company hold a mining right, which can be either a mining licence or a special mining licence subject to issuing not less than 16% free carried interest to the Government of Tanzania (GOT) and signing a framework agreement, among others. 2.

What is the difference between buying shares in a mining company and buying the mining asset itself? The simplest difference is this: when you buy shares, you buy the company that owns the mining project. When you buy the asset, you buy selected project assets. A share purchase usually gives the buyer control of the company, but the buyer also inherits the company’s history, including liabilities, unpaid obligations, disputes and compliance gaps. An asset purchase allows the buyer to choose the specific assets it wants. In both instances, transfer of shares or a mining asset is subject to regulatory approvals including merger approval. Also, GOT consent under the framework and/or shareholders agreement will be required and taxes are payable, even if the share transfer is occurring outside of Tanzania. 3.

What should an investor check before paying a deposit or exclusivity fee for a mining project? The investor should do legal and tax due diligence, a site visit for boundary verification and identification of any disputes and project affected persons who need to be paid compensation and environmental due diligence. 4. What approvals are needed before acquiring a company that holds mining rights? A foreign investor can acquire shares directly in a company which holds a mining or special mining licence or acquire shares at a parent level (i.e. outside of Tanzania) leading to an indirect change in the Tanzanian entities holding the mineral right.

The approvals required will include (a) a merger approval from the Fair Competition Commission; (b) capital gains tax clearance and stamp duty; (c) consent from the Mining Commission; and (d) consent from the GOT under the framework and/or shareholders agreement. 5. Can an investor sign a conditional sale agreement before regulatory approvals are obtained?

Yes. The foreign investor can sign a conditional sale agreement before regulatory approvals are secured. An acquisition agreement will have conditions precedent that the acquisition shall not complete unless all the regulatory approvals are issued without conditions or with reasonable conditions to be satisfied before closing. 6. What should be included as conditions precedent in a Tanzania mining acquisition?

The standard conditions precedent to be included for a mining acquisition (whether acquisition of a mineral asset or shares) are as follows: (a) obtaining regulatory approvals including approval from the Mining Commission and a merger approval from the Fair Competition Commission without conditions or with reasonable conditions satisfiable prior to closing; (b)a letter of no objection from the GOT; (c) corporate approvals, including a board resolution approving disposal of shares or mineral asset (d)tax clearance for the transaction from the Tanzania Revenue Authority (e) disclosures of existing liabilities e.g. outstanding taxes, material litigation etc. (f) Confirmation that the mining licence is valid and in good standing – this can be done by obtaining an updated search result from the Mining Commission and curing any defaults prior to closing.

(g)Environmental approvals and compliance (h)Local content compliance (i) Release of all encumbrances, otherwise satisfactory transfer of accepted liabilities to the buyer (j) Third party consents – identifying those required and ensuring that they are obtained prior to closing. B. Mining licences and regulatory due diligence 7. How do you confirm whether a mining licence is valid, active and in good standing? There are various material checks that should be undertaken before you make a decision to acquire or invest in the mine. (a) Lodge a search at the Mining Commission and list everything you would like to know about the mineral right e.g. registered owner, encumbrances, outstanding annual rent, outstanding filings, any reported disputes, issuance and expiry dates etc.

(b)Lodge a request at the National Environment Management Council office where the mine is located to check if there are any environmental defaults. (c) Check at the Tanzania Revenue Authority if there are any outstanding taxes and do not solely rely on the standard tax clearance certificate (TCC) issued annually because the TCC doesn’t mean that the mineral right holder has no outstanding tax liabilities. (d)Site visit and verification is important by checking the boundaries and if there are any occupants other than the mineral right holders, engage to understand about payment of compensation and removal of such occupants.

8. What licence breaches can quietly affect the value of a mining project? Environmental, tax and Mining Act compliance can affect the value of the mining project. Usually, the environmental and tax breaches can lead to hefty penalties, including closure of the mine. Mining Act breaches can lead to suspension or cancellation of the mineral right licence. 9. Can a mining licence be transferred, assigned, pledged or indirectly transferred through a share sale? Yes, subject to obtaining the relevant regulatory approvals. 10.What happens if licence fees, annual reports or work obligations have not been complied with? The usual outcome is the imposition of hefty penalties, closure of the mine until the fees are paid, suspension and/or cancellation of the mineral right licence.

11.How should an investor check whether the licence area overlaps with another licence, reserved area, forest area, village land or protected area? Yes. This is very important. Prior to acquisition, it is important and necessary to undertake valuation of the mining area, including survey of the boundaries with the purpose of aligning the boundary coordinates with those indicated in the licence. If within the mineral right boundary coordinates there is a reserved, forest or other protected area, then it is necessary to separately apply for the relevant regulatory approvals from the authority which is responsible for the protected area, and may lead to additional fees arising from tree felling, among others.

Most mineral right areas are on village land and it is necessary to engage with the village authority(ies) falling within the mining area to agree on a number of issues, including CSR plan and its implementation. 12.What practical information should investors request from the Mining Commission before signing? Information about the status of the mineral right e.g. ownership, defaults, reported disputes, encumbrances, expiry date, outstanding annual rent etc. C. Land and surface rights 13.Does holding a mining licence automatically give the investor the right to access and use the land? Yes, but subject to obtaining the relevant licences and permits from other regulatory bodies and payment of compensation to the project affected persons before commencement of the mining operations. 14.What is the difference between mineral rights and surface land rights?

Mineral rights licence entitles the holder thereof to extract mineral(s) named in the licence for commercial purposes. Surface land rights relate to rights to use the surface of the land for commercial (other than mining), residential, and/or agricultural purposes. The holder of the mineral right can use the surface of the mining area for operations directly related to its mining operations like construction of offices and workers’ residences, processing and storage facilities etc. The holder of the mineral right does not need to obtain right of occupancy in order to use the

surface of the mineral right area for activities related to the mining operations. The rights conferred under the certificate of right of occupancy are for surface land use rights which do not include rights to extract anything from under the land surface save for water, subject to obtaining the relevant water permit. 15.Can a mining project be delayed by compensation or resettlement issues? Yes. Compensation and resettlement issues may prevent the mining company from entering the project area and undertaking mining activities. This may be caused by an injunction issued by court until the dispute is resolved or the area of dispute is where the main mining operations are to commence from.

However, if the disputed area is outside the immediate mining area, the mining company may commence mining operations whilst the disputes are pending in court to the extent there is no injunction order over the whole mining area and the continued operations do not risk the safety of the occupants who are still residing in the mining area and are part of the dispute. 16.What should investors check where a mining project involves village land? Most mining projects in Tanzania are on village land. It is important to first engage with the relevant village(s) authority(ies) who have jurisdiction over the mining area.

There will be meetings with the village authority chairperson and its members to discuss the mining project, compensation and resettlement initiatives, payments to be made to the village authority, including CSR programme which should be jointly agreed and implemented during mining activities. 17.How should compensation, resettlement and community claims be handled before closing? Under the law, the mineral right holder is required to undertake valuation exercise, which is inclusive of survey activities through the valuers of the relevant municipal authority. The valuation exercise will involve the village authority(ies) having jurisdiction over the mining area, the district or municipal authority, the police for security and it is usually undertaken over a period of several weeks depending on the size of the mining area.

Then the valuation report will be prepared and presented to the chief government valuer for approval. After the approval, the project affected persons will be paid compensation and be required to vacate the mining area within the notice period. If there are any disputes, compensation can be paid to the rest and the paid project affected persons can vacate the mining area. Those who are disputing the valuation exercise or the amounts to be paid will likely refer the disputes to court and the mining operations can continue at the undisputed areas, to the extent that they do not interfere with the safety of those occupants who have not vacated due to the outstanding disputes.

Whilst it is not legally necessary to pay compensation to all occupants over the whole mining area at a go, it is advisable to undertake the valuation exercise once and remove all occupants (even at the mining area which will not be mined immediately) because continued existence of the occupants always attracts continuous unauthorised entry in the mining area even by new persons after the project has commenced. The new persons will likely demand to be paid compensation in the 2nd or 3rd phases of compensation whilst they have no legal right since they entered the mining area after the issuance of the mining licence and commencement of the mining operations. Challenging such claims is usually time consuming and costly. As long as there is continued existence of project affected persons in the mining area, it is an

impending dispute waiting to happen when the mining company extends its mining activities over the area not previously actively mined. 18.Can land-related disputes delay financing even where the mining licence is valid? Yes. It can delay financing because financiers want to obtain a clean due diligence report, without any encumbrances or material disputes which may affect the mining operations leading to inability to service the facility. D. Local content and procurement 19.What local content obligations should a mining investor check before entering Tanzania? There are mining local content regulations which indicate the local content compliance by mining companies, and their suppliers and service providers.

The local content compliance requirements are detailed and require specialized support but the basic ones are as follows: (a) Registration of the local content and having a valid local content approval letter (b)Filing quarterly and annual reports (c) Ensuring service providers and suppliers are local content compliant, especially local ownership requirements and having local content approval letters 20.When must goods or services be procured from Tanzanian or indigenous Tanzanian companies? Mining companies are required to give preference for procurement of all types of goods and services from indigenous Tanzanian companies.

There are some activities which are reserved to suppliers and service providers who are 100% Tanzanian owned which are as follows: Supply of General Lubricants Supply of Cable Bolt and Accessories, Split Set, Rebars, Mining Mesh - Underground Support Materials Supply of Chain Link Fencing, Wire Netting, Barbed Wire Supply of Explosives and Accessories Supply of Cement and Building materials Owner mining prohibited in favour of Contract Mining - Surface Operations (Open Cast mining services including Contract mining, Drilling, Blasting and Haulage) Supply of Metal/PVC Core Trays Vehicle Hire Services Supply of Overalls and Work Clothes and PPEs Power Rental and Captive power supply Haulage, Logistics and Transportation Services Crushing, Civil, Building and Construction of access/haul roads & other infrastructure, etc.

Warehousing, Clearing and Forwarding Geophysical Ground-based Survey; Mapping, Pitting and Trenching Catering Services, Camp Management, Cleaning and Laundry Land Valuation and Resettlement

Legal Services Supply of Linning Material (Liners) Supply of Activated Carbon Supply of Chemicals and Reagents 21.Can a foreign contractor provide specialised mining services if local capacity is limited? Yes, subject to complying with local content requirements. Foreign contractor cannot provide the services or supply goods which can only be provided by entities which are 100% Tanzanian owned. 22.What local content documents should be reviewed during legal due diligence? It is advisable to review: (a) the quarterly and annual local content reports filed at the Mining Commission; (b)the Mining Commission local content approval letter to ensure it is valid; and (c) the compliance by all suppliers and service providers of the mining company. 23.How can local content non-compliance affect procurement, contracting and project timelines?

Non compliance with local content by a mining company may lead to penalties, suspension and/or cancellation of the mining licence and exposes the senior officials of the mining company, including its directors to civil and criminal liability involving a custodial sentence. E. Financing and security 24.Can lenders take security over mining rights, project assets, shares and bank accounts? Yes. It is possible subject to regulatory notification and approval. 25.What approvals are required before a mining right can be mortgaged or used as security? If the financier is a local or international bank or financial institution, a prior notification should be filed at the Mining Commission by filing the security documents e.g. the mortgage agreement or debenture. No prior consent will be required.

If it is any other financier, consent is required from the Mining Commission prior to registering the mortgage over the mineral asset as security. Note that all foreign loans with a tenure of more than one year must be registered at the Bank of Tanzania and be issued with a debt record number. 26.What makes a Tanzania mining project bankable from a lender’s perspective? Several factors are relevant, the main ones being: (a) full compliance with the mining laws and having a clean search results from the Mining Commission; (b) no encumbrance over the mineral right; (c) letter of support from the GOT; (d) no material disputes which may affect mining operations or liquidity of the project; (e) tax compliance and exemptions from payment of taxes on capital goods, VAT during construction phase, excise duty among others.

These have been greatly resolved under the Finance Act, 2026; (f) signed framework agreements which are favourable to financiers, especially ranking in priority against all other claims; (g) ability to enforce security and dispose of the asset to a third party in case of default; (h) clear

land surface rights without disputes or interference by project affected persons; (i) bankable feasibility study; (j) environmental compliance, including ESG requirements and having all the key licences and permits; (k) offtake and revenue certainty i.e. who is the buyer and who can buy without unnecessary restrictions, (l) ability to repatriate profits; and (m) insurance cover. 27.How do unresolved land, environmental or local content issues affect financial close? Since any of these can cause hefty penalties, mine closure, suspension or cancellation of the licence, it is unlikely financiers will release the funds until all these issues are fully resolved. F. Government agreements, incentives and tax certainty 28.When does a mining project need a framework agreement with the Government?

Holders of a mining licence and special mining licence must enter into a framework agreement with the GOT and issue not less than 16% free carried interest to the GOT. 29.Are incentives in a framework agreement automatically enforceable, or must they be reflected in law or Gazette notices? All incentives indicated in the framework agreement must be gazetted first before they become enforceable. The Finance Act of 2026 which came into force on 1 July 2026 has recognized the framework agreements and has empowered the Minister of Finance to publish Government Notices to give effect to the incentives indicated in the framework agreements subject to approval of the Cabinet. 30.Has the Finance Act 2026 improved certainty for mining framework agreements and exemptions? Yes. It has.

You can read more about the changes in my last article: https://lnkd.in/dcgykBdF Author: Amalia Lui Africa Projects (Extractives, Energy and M&A), Investment, Policy & Strategy Advisor | Business Development & Cross- Border Deal Execution | Government Relations, Risk & Legal Insight | 16+ Years Driving Growth Across Multiple Jurisdictions Email: amalia@amaluitz.com Linkedin: https://www.linkedin.com/in/amalia-lui-95548317/ Disclaimer The views expressed in this paper are those of the author only and should not be considered as an official interpretation, defamatory, or an interference of any legislation, laws, or policies of any country including Tanzania. The contents of this paper should not under any circumstances be reproduced or used without the express written consent of the Author. It should not be considered as legal advice to any of its recipient(s) and should not be relied

upon without obtaining further legal advice. We accept no liability for any loss occasioned or suffered due to the contents of this paper. The information contained herein is general and is not intended to address the circumstances of any particular deal. Although effort has been made to research and share the correct information, we do not provide any guarantee to such information.