The government’s commitment to see a vibrant minerals sector has been depicted in the 2023/24 National Budget tabled in National Assembly, with focus to set up a national gold reserve, curbing smuggling and enhancing value addition.
Minister for Finance and Planning, Dr Mwingulu Nchemba on Thursday tabled a 44.39tri/- budget estimates for recurrent and expenditure, which also contained proposed amendment of the Mining Act, CAP 123, to exempt refineries centres from paying the inspection fee of one per cent.
The measure, he said, is intended to stimulate growth of the transportation of minerals by the small mining sector in the country, as well as attracting more investment, promoting employment and increasing government’s revenue.
Dr Nchemba also said the government plans to exempt Value Added Tax (VAT) on supply of precious metals, gemstones and other precious stones at buying centres, mineral markets and Gem houses designated by the Mining Commission under the Mining Act or refinery situated in Mainland Tanzania.
“This measure is intended to attract sale of minerals at mineral trading hubs and increase the contribution of the Mining Sector to the GDP,” said Dr Nchemba.
The mining sector under the tabled budget has been allocated 89.3bn/- in 2023/24 financial year compared to 83.3bn/- in 2022/23.
The National Assembly on April 27th, this year, approved 89.4bn/- for the Minerals Ministry as requested by Minister Dotto Biteko.
Yesterday, Dr Nchemba said the government will keep taking a number of measures in ensuring value addition and prevention of mineral smuggling.
To make it work, he said the government continued to disburse funds for establishing mineral centres, where a total of 40 new centres have been opened during the Sixth Phase Government, thus making a total of 93 mineral centres.
Moreover, in the coming financial year, the government will complete construction of centres of excellence for small scale miners in Songea, Mpanda and Chunya districts, purchasing Tanzanite mineral zoisite worth 2.2bn/-, purchasing five small mining plants for small-scale miners and purchasing two plants for charcoal production using coal.
The government expressed commitment that in 2023/24, it will continue to strengthen the mining sector’s contribution to the economy.
The government will collaborate with the private sector to expedite research on strategic minerals and other minerals, as it establishes mineral auctions in the country in order to enable gemstone miners, including Tanzanite minerals to access competitive international markets and attract value addition in minerals.
“This intervention will promote existence of gemstones in Tanzania and emphasise on minerals value additions,” he insisted.
Adding “following the completion of the construction of gold refinery plants, the government continues to provide incentives to ensure availability of sufficient raw materials. In this endeavour, the government has reduced royalties for minerals sold in refinery plants from six per cent to four per cent. “
He assured stakeholders that the government will continue to review policies, laws and tax administrative procedures in order to ensure purification of gold before exportation.
Dr Nchemba used the podium to announce good news in that the government has finalised procedures for purchases of gold through the Bank of Tanzania (BoT) aiming at establishing the National Gold Reserve that will eventually offer competitive prices to miners and strengthen the currency.
“This is in line with directives from President Samia Suluhu Hassan, together with the contributions of MPs during discussions on the budgets for Ministry of Minerals, Ministry of Finance and Planning and others,” said Dr Nchemba.
The Central Bank of Tanzania has started purchasing gold for its reserve and has so far acquired 400 kilogrammes of the precious metal.
Gold reserves have always been an important part of the diversification of global reserves for countries. It is an important asset of foreign exchange reserves.
He further informed the House that in implementing Liganga and Mchuchuma projects, the government has released funds for compensation exercise to pave way for the project to take off without any encumbrance between the parties.
Tanzania is among the countries with highest gold reserves, with data showing that it boasts 45 million ounces. Mining makes up more than 50 per cent of the country’s total exports, of which a large part comes from gold.
During the budget for 2023/24 financial year, Minister for the docket Doto Biteko said BoT had already prepared regulations for buying gold.
“What we’re doing now is finishing up the procedures in the local refineries so that the government can start buying gold and we will ensure that previous mistakes do not occur again,” he said.
He also stated that financial institutions should give time to refinery owners because the government is still working on other policy issues, such as the issue of incentives in the refinery.
According to the minerals minister, the government had also made tremendous strides in establishing markets and mineral buying centres.
“As of March 2023, about 42 markets and 93 minerals buying centres had been established, and between July 2022 and March 2023, sales in markets and minerals selling centres had soared to 1.7tril/- and indeed, having these centres has contributed to a greater extent in government revenue collections,” said Dr Biteko.
On smuggling of minerals, the minister told the assembly that the government had managed to seal several loopholes to ensure that Tanzanian gemstones are not smuggled outside the country.