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A Firm Sues Government of Tanzania on Mining Contracts

What we have longed to see in Tanzania for a long time is now taking place. The government of Tanzania have played the accessory role and have helped a lot in continuing heinous crimes against Tanzanians by the mining companies with Barrick Gold Corporation topping the list. Our hopes now is that Civil Society and faith Based Organisations will back up these deliberate efforts by patriotic sons and daughters of the land…

By Bernard James

A constitutional petition has been filed in the High Court, seeking to have all the mining contracts entered into by the government without Parliament’s approval declared null and avoid, in an effort to curb the plunder of the country’s natural resources.

A Dar es Salaam-based environmental and human rights activist, Mr Rugemeleza Nshala, and a company called Mtetezi Limited, have sued the minister for Energy and Minerals and the Attorney General.

They want the court to immediately stop the operations of the holders of special mining licences and mining companies that have signed Mining Development Agreements (MDAs) with the government “because their activities are unconstitutional”.

The petitioners claim that the powers conferred on the minister for Energy and Minerals to sign MDAs are unconstitutional, as they interfere with the duties of other ministries, councils, agencies and departments.

The petitioners are challenging the Mining Act No 5 of 1998 that gives the minister powers to sign MDAs on behalf of the government.

They now want the court to declare that all the MDAs signed with the holders of the special mining licences, which were not approved by Parliament in line with the mandatory requirements of articles 63 (3) (a-e) of the Constitution, be scrapped.

The article gives the National Assembly powers to deliberate on and ratify all treaties and agreements to which the United Republic of Tanzania is a party, and lists provisions, which require ratification. It also empowers Parliament to put any questions to any minister concerning public affairs.

The petitioners are accusing the energy minister of granting mining concessions to foreign mining companies of unlawfully, and allocating large areas that were initially owned by villagers and artisanal miners to foreign firms.

They assert that the allocations are responsible for the forceful displacement of millions of agriculturalists, peasants, pastoralists and artisan miners from their lands, in total disregard of their land and property rights enshrined and protected in the Constitution.

The petitioners want the court to order that all the people displaced to pave the way for large-scale mining be resettled on their land and paid compensation.

“We feel that our country’s mineral resources are being squandered, as the current exploitation is only benefiting the foreign mining companies and yet the current mining and its taxation legal regime are not only illegal, but also unconstitutional,” they argue.

The petitioners are also arguing that the granting of mining concessions to foreign companies through local affiliates under the guise of Section 10 (1) and (2) of the Mining Act No 5 1998, not only grants unconscionable incentives to those firms, but also purports to supplant the laws of the land, and curtail the legislative powers of Parliament.

The section prevents Parliament from passing any law that might in “one way or another interfere with their tax, social and economic obligations that they found at the time they came to invest in the country”.

The petitioners argue that “the curtailment of the parliamentary powers is not only wantonly violates Article 13, which calls for equal treatment under the law, but also the entire democratic framework enshrined in the Constitution.”

Article 63 (3) (a) to (e) grant Parliament powers to oversee, monitor and supervise the workings and operations of the government, including the ratification of all agreements signed in the name of the United Republic of Tanzania.

“Yet the respondents have never presented any Mining Development Agreement (MDAs) signed with foreign mining companies to Parliament for deliberation, review, ratification or rejection.”

The petitioners are also accusing the government of granting “generous and unwise incentives”, including tax-holidays, tax exemptions, “unlimited immigration quotas for their so-called experts”, and the fuel levy, all of which, they claim, have led to the plunder the country’s mineral resources.

To back up their petition, the petitioners are citing the tax-free sale of several mining companies.

These include Lusu gold mine, which was sold by Samax Resources of Canada to Ashanti Goldfield in 1998, at $213 million, the Bulyanhulu gold mine disposed of by Sutton Resources of Canada to Barrick Gold, at $348 million in 1999, and Nyabigena and Nyabirama mines in Tarime district that were sold by East Africa Gold Mine to the Placer Dome at $252 million.

During the hearing, the petitioners say they will demand that the minister and the AG produce in court all the documents on the sale of those assets by the foreign mining companies.

They say they will also to rely heavily on the findings of commission on mining management (the Bomani team) appointed by President Kikwete in 2007.

According to the Bomani report, while the foreign mining companies were raking in millions of dollars from Tanzania’s mineral resources, they paid no income tax and still enjoyed a lot of tax waivers.

The petitioners will show to the court how six foreign mining companies were granted an Excise duty waiver of Sh39.8 billion and Sh59.0 billion in 2006/07 and 2007/08, respectively.

The petitioners also challenge Section 10 (1) and (2) of the Mining Act No. 5 1998, which allows the minister to limit environmental management responsibilities of the holders of special mining licences, the obligations of which are demanded by sectoral environmental legislation and the Environmental Management Act No 20, 2004.

Mr Nshala and the company are also challenging the dispute settlement procedure by way international arbitration, as set out in the Mining Act 1998.

It is their contention that the procedure voids the jurisdiction of domestic courts in determining mining investment disputes, contrary to Article 107 (1) of the Constitution, which vests in the Judiciary the powers to hear and determine all disputes arising in the country.

The petitioners are accusing the government of abdicating its responsibility of policy design, formulation and implementation and becoming an agent of the World Bank, implementing the latter’s dictates, including the Strategy for African Mining, 1992, which paved the way for enactment of the Mining Act, No 5, 1998.


This entry was posted on Mar 23, 2011 by in Extractive Industry, Integrity & Accountability, Local News.

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