Tanzania is grappling with the challenge of ensuring that its mining contracts protect the country's long-term national interests. This comes as global competition for mineral resources in Africa continues to intensify. Mining contracts play a crucial role in determining who controls production, where minerals are processed, how much revenue the government receives, and the extent to which mining activities stimulate the economy in producing areas.
The Extractive Industries Transparency Initiative (EITI) has highlighted the importance of transparency in these contracts. The Simandou iron ore project in Guinea is a case in point, demonstrating the vast opportunities and importance of transparent contracts. According to the EITI, the project could generate hundreds of millions to over $1 billion annually for the Guinean government in its initial years, significantly enhancing the country's ability to fund public services and development.
However, the EITI has also emphasized that some critical contractual information remains non-transparent. This experience underscores the need for governments to establish robust systems for managing revenues before substantial mining revenues start flowing. Zambia offers another lesson in the challenges associated with relying heavily on large mining projects. The country's copper sector has faced operational and financial challenges, including power shortages and halts in production at some smelters.
The Zambian parliament was informed in March 2025 that operational challenges contributed to delays in payments to some suppliers and contractors. This situation highlights another risk that Tanzania should consider: while a large mining project can significantly contribute to the economy, its challenges can affect workers, suppliers, governments, and businesses surrounding the project. The Democratic Republic of Congo (DRC) provides a lesson on the challenge of using resource governance to gain greater economic leverage.
The DRC is the world's largest producer of cobalt, but efforts to control exports and influence cobalt prices have been challenged because much of the cobalt is produced as a byproduct of copper mining. Export restrictions also led to increased cobalt stockpiling during some periods. This experience shows that governments should understand the economics of the entire mineral value chain before imposing significant production and sales restrictions.
Ghana has taken a different approach by emphasizing greater participation by locally-owned contractors in mining activities. In 2026, Ghana's Minerals Commission ordered some international mining companies to start transferring their operations to local contractors, aiming to build the capacity of Ghanaian companies and ensure more value remains in the country. This experience could be relevant for Tanzania in strengthening the participation of local companies in the mining sector's value chain.
To mitigate risks in large mining contracts, Tanzania can ensure agreements include measurable clauses on local participation, transparency in royalties, and revenue sharing. Contracts can also include conditions for local mineral processing where commercially feasible, technology and skills transfer, environmental rehabilitation post-mining, and clear procedures for changes in ownership. Independent legal and economic reviews of contracts before signing and a public disclosure mechanism for companies' performance are also crucial.
Key points
- Tanzania should prioritize national interests in mining contracts to ensure long-term benefits.
- Transparent and robust contracts can significantly enhance Tanzania's ability to fund public services and development.
- Local participation and value addition in the mining sector are crucial for Tanzania's economic growth.
