Local Content Submission Guidelines and Integrity Pledge Regulations

Local Content Submission Guidelines and Integrity Pledge Regulations On 13 July 2018, new Mining Regulations were published:  Mining (Integrity Pledge) Regulations 2018 ( Integrity Pledge Regulations); and  Mining Commission (Guideline for Submission of Local Content Plan) 2018 (Submission Guidelines). Integrity Pledge Regulations Who is affected? All persons who are involved in prospecting and mining activities, their contractors and sub-contractors should adhere to the Integrity Pledge Regulations (Stakeholders). Key obligations under the Integrity Pledge Regulations: (a) The Stakeholders are required to prepare and submit signed integrity pledges to the Mining Commission. The integrity pledge should be submitted in a prescribed format as stipulated in the relevant regulations.

(b) The Stakeholders should establish and maintain a compliance programme which includes a written code of conduct, policies and procedures, training, awareness campaigns and education and notification of government's investigation or legal proceedings. (c) Also, the Stakeholders are required to develop, implement and distribute a written code of conduct to the person to whom it applies i.e. its employees, contractors, subcontractors and agents. (d) Stakeholders are now required to, among others, conduct mining operations and activities with the utmost integrity, desist from engaging in any arrangement that undermines or is prejudicial to Tanzania’s financial, monetary and tax systems as well as Tanzania's economic policies and national security and ensure full compliance with Tanzanian laws and its regulations.

Penalties for non-compliance Depending on the offence/breach committed, the Stakeholder who is in breach of these regulations may be required to pay a fine of not less than Tshs. 100 million, a minimum imprisonment of 10 years, suspension or cancellation of mineral rights and any other penalties imposed by other Tanzanian laws. It is worth noting that, part of the offences/acts/conduct which are punishable under the relevant regulations are offences relating to corruption, tax evasion, transfer pricing, double taxation and under or overpricing. Grace period The Stakeholders are required to comply with the Integrity Pledge Regulations from 13 July 2018 to 13 October 2018.

Submission Guidelines Who is affected? The Submission Guidelines apply to all applicants of mineral rights and holders of prospecting, mining, special mining, processing, smelting and refining licences, including their contractors, sub-contractors or other allied entity engaged in mining activities (Holders). The key obligation: The submitted local content plan should contain a declaration from the Holder that, it shall give preference to goods and services which are procured and manufactured in Tanzania provided that, the same meets the specifications of the mining industry. The declaration should be in a prescribed format as stipulated in the Submission Guidelines. Re-submission It is advisable that, entities which had already submitted their local content plans prior to the issuance of the Submission Guidelines should re-submit the same by using the prescribed formats.

There are items which are now expressly required under the Submission Guidelines which were not expressly required/stipulated under the Mining Local Content Regulations or the Mining Act. Our support for your business We assist our clients to: (a) prepare and submit the integrity pledges and the local content plans and liaising with the Mining Commission; (b) prepare the code of conduct; (c) undertake a local content legal due diligence and advise on the entity's compliance; (d) undertake training and raise awareness of the local content requirements; and (e) understand the requirements under the newly issued regulations. Disclaimer The views expressed in this paper are those of the author only and should not be considered as an official interpretation, defamatory or interference of any legislation, laws or policies of any country including Tanzania.

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