Junior miners Strandline, Black Rock, OreCorp sign agreements with Tanzania

Tanzania’s new government, under President Samia Suluhu Hassan, has pledged to grow the mining sector. Relations with mining companies have been improving since a January 2020 deal with Barrick Gold ended a long-running tax dispute.

“Today we are participating as a key shareholder in mining our precious resources which have an important role in the economic development of our country,” Hassan said at a ceremony in Dar Es Salaam.

Tanzania aims for the mining sector to contribute 10% of GDP by 2025, Hassan said, adding that the current trend is encouraging as mining currently accounts for around 6.7% of GDP.

Petra Diamonds also signed an agreement granting the government a 16% free carried interest in its Tanzanian subsidiary Williamson Diamonds Limited.

NOW READ: Petra Diamonds’ stake in Williamson to shrink as part of deal with Tanzania

The move brings Petra into line with Tanzania’s 2017 mining legislation which sees the government get a 16% free carried interest in all major mines in the country. Like many African countries, Tanzania has sought greater state control of the mining sector.

Petra Diamonds and the government of Tanzania will each give up a proportionate amount of their current stakes to grant the 16% free carried interest, which is given to the state without any attached financial obligation.

Petra’s stake will thus reduce from 75% to 63%, with Tanzania’s stake increasing from 25% to 37%.

Under the agreement, Petra and the government will both help fund the restart of the Williamson mine – Tanzania’s only major diamond mine – which Petra suspended in 2020 due to the coronavirus pandemic, and which has recently started ramping up.

(By Nuzulack Dausen and Helen Reid; Editing by Louise Heavens, David Evans and Jane Merriman)