Mining

November 2015

Briefing

Transfer of mineral
rights, restrictions on
grant of dealer licences
and change of control
In this months briefing we look at the transfer of
mineral rights, restrictions on grant of a dealer
licence and the notifications that need to be made
in relation to the change of control.
Legal basis
The Mining Act of 2010 (the Mining
Act) is the basic law which governs
all mining and mineral activities
in Tanzania. There are a number of
regulations made under the Mining
Act including the Mining (Mineral
Rights) Regulations, GN No. 405 of
2010 (the Mineral Rights Regulations).

A: Transfer of mineral rights

The Mining Act provides that, the
holder(s) of a mineral right is entitled
to assign or transfer their mineral
right or an undivided proportionate
part thereof to another person.
Hence it is possible for more than one
person to own a mineral right clearly
indicating the percentage that each
person holds. Further to that, the
said person who holds the mineral
right may either individually or jointly
transfer the same to another person(s).
Generally, the transfer of a mineral
right must be notified in a prescribed
form to the licensing authority i.e. the
Minister for Energy and Minerals, the
Commissioner for Minerals or to the
Zonal Mines Officer. The prescribed
form for the transfer of a mineral
right is contained in the Mining Rights
Regulations. Generally the transfer of
a mineral right does not require the
consent of the licensing authority save
for the transfer of a mining licence or
special mining licence.

Consent for transfer

A person who seeks to transfer a
mining licence or special mining
licence must apply and obtain prior
written consent for the transfer of
the mining or special mining licence.
The requirement to obtain consent for
transfer of a mining licence or special
mining licence will also apply in the
case where the particular mining
licence or special mining licence is
held by more than one person. In this
case, the person who seeks to transfer
his percentage of ownership in the
mining licence or special mining
licence will apply for consent to the
licensing authority.
It should be noted that, the
requirement to obtain prior written
consent for the transfer of a mining or
special mining licence does not apply
if the transfer/assignment is to:
a. An affiliate, where the obligations of
the affiliate are guaranteed by the
assignor or by a parent company
which is approved by the licensing
authority. An affiliate means any
company which directly or indirectly
controls or is controlled by the
company which wants to transfer its
mining or special mining licence
b. A bank or other financial institution
by way of mortgage or charge given
as security for any loan or guarantee
in respect of mining operations

c. Another person who constitutes the holder of the mining

or special mining licence

f. Certified copy of the Taxpayer Identification Number

Certificate of the transferor and transferee

Although not clearly stipulated under the law, in practice

the application for consent to transfer a mining licence or
a special mining licence should be accompanied by the
following documents:

g. Certified copies of the previous land rent receipts

i. A copy of the mining licence or special mining licence

ii. The transfer agreement between the parties. The
requirement to obtain prior consent from the licensing
authority should be one of the condition precedents in
the transfer agreement
iii. Application letter stating that the transferor is seeking
consent for the transfer of the mining or special
mining licence
iv. Details of the transferee i.e. if the transferee is a
company, constitution documents of the said company
and board resolution approving the purchase of the
mining licence or special mining licence should be
submitted. If the transferee is an individual, copy of
national ID or passport should be submitted
v. Proof of financial ability of the transferee to proceed
with the mining activities
vi. Commitment by the transferee in a form of a letter
addressed to the licensing authority that it will strictly
observe the conditions stipulated in the mining or
special mining licence and the programme for
mining operations
vii. If the transferee is a company, it should submit its latest
audited financial statements
Kindly note that, the licensing authority may request for
additional documents as it deems fit before it grants the
consent for transfer. The consent for transfer is normally
issued in a form of a letter addressed to the registered
holder of the mining licence or special mining licence. Once
the consent is granted, the parties to the transfer agreement
may proceed to pay the requisite taxes and file the relevant
documents for the transfer of the mining licence or special
mining licence. Registration of transfer of a mineral right
normally takes 7-14 working days to be finalised.
Transfer of a mineral right is normally filed at the respective
licensing authority by submitting:

h. Consent for transfer if the mineral right being transferred

is a mining or special mining licence
i. Certified copy of a board resolution to either sell or
purchase the mineral right if either or both the transferor
and transferee are corporate bodies
j. Any other document as may be required by the
licensing authority
It is worth noting that:
a. If two or more persons own one mineral right, either of
the registered holders of the mineral right may apply for
transfer of the mineral right to either of the co-holders or
transfer his percentage of ownership to another person.
The procedure for transfer is similar to the transfer of a
mineral right where there is a single holder of the
mineral right
b. The procedure and requirement to some transfers of
mineral rights including but not limited to mining licence
and special mining licence may be subject to obtaining
merger approval from the Fair Competition Commission
prior to undertaking the transfer

B: Restrictions on grant of dealer licences

The Mining Act prohibits any person other than a mineral
right holder, a licensed dealer, or licensed broker to have in
his possession or dispose of any minerals unless the said
person is an employee, contractor or agent of the mineral
right holder, a licenced dealer or licensed broker. A dealer
licence is renewable annually and it is granted by the
relevant Zonal Mines Office which entitles the holder to:
a. Buy, acquire, sell or otherwise dispose of minerals as
specified in the dealer licence
b. Have in his possession the minerals specified in the dealer
licence for the purposes of selling or otherwise disposing
of the minerals
c. Export minerals specified in the dealer licence subject to
payment of the applicable royalties and taxes

a. The requisite form

However there are restrictions on persons who may be

granted mineral rights and the type of minerals which can
be traded under a dealer licence.

b. The certified copy of the Capital Gains Tax

Clearance Certificate

1. A dealer licence may be granted to either of the

following persons:

c. The original Transfer Agreement which should be

stamped by the Tax Revenue Authority that stamp duty
has been paid
d. Certified copy of the mineral right being transferred
e. Details of the transferor and transferee i.e. certified
copy of identification for individuals and incorporation
documents for corporate bodies

a. Individuals who are citizens of Tanzania

b. A corporate body owned 100% by Tanzanians
c. A partnership composed exclusively of citizens
of Tanzania
d. A corporate body in which Tanzanians own not less
than 25% of the issued share capital

2. A dealer licence may only be granted with respect to the

following minerals:
a. Gold
b. Metallic minerals

a. A letter which should clearly state the existing

shareholders of the company, the proposed change of
control whether it is through allotment of shares or sale
of shares, the new shareholders and the shareholding
structure after such change of control

c. Coloured gemstones
d. Diamond
e. Coal
f. Industrial minerals
It is worth noting that, a dealer licence will be granted to
a person who has put the required security in place over
the premises where the minerals will be stored. Prior to
the issuance of a dealer licence, the Zonal Mines Officer
will visit the premises where the minerals will be stored
and obtain a copy of the security contract executed by the
applicant and a security company or security guards who
will be guarding the premises.

C: Change of control
A company or body corporate which has been granted a
mineral right shall not, without the written consent of the
licencing authority, register the transfer of any share(s) of
the company or enter into an agreement with any person if
the effect of doing so would be to give that person control of
the company.
A person is deemed to have control of the company if:
a. The said person holds a total of 50% or more of the equity
shares of the company
b. If the person is entitled to appoint or prevent the
appointment of, half or more than half of the number of
directors of the company
In practise, if there is a change of shareholding of the
company but the said transfer of shares does not qualify for
the requirement to obtain consent as per parts (a) and (b)
above, it is advisable for the company to notify the licensing
authority of the intended change of shareholding prior to
finalisation of the transfer of shares. Also, the issuance of
notification to the licensing authority applies if the change
of shareholding is through allotment of shares to the
existing shareholders.

Further advice should be taken before relying

on the contents of this summary. Clyde & Co
Tanzania accepts no responsibility for loss
occasioned to any person acting or refraining
from acting as a result of material contained in
this summary. No part of this summary may be
used, reproduced, stored in a retrieval system
or transmitted in any form or by any means,
electronic, mechanical, photocopying, reading or
otherwise without the prior permission of
Clyde & Co Tanzania. Clyde & Co Tanzania
2015 registered in England and Wales.
Authorised and regulated by the Solicitors
Regulation Authority.
Clyde & Co LLP 2015

CC008712 - October 2015

The application for consent or notification of change of

control is normally filed by submitting the following
documents:

b. The copy of the identification documents of the new

shareholder. If the new shareholder is a corporate body,
then the incorporation documents should be submitted
c. Two passport size pictures of the new shareholder, if
an individual
d. Allotment forms or Share Purchase Agreement
e. Any other document as may be requested by the
licensing authority
Kindly note the following with respect to applying for
consent or notification of change of control to the
licensing authority:
a. The required documents for application of consent or
notification of change of control are not specifically
provided under the law. The above list is based on
our experience
b. Change of control may be subject to obtaining a
merger clearance certificate from the Fair Competition
Commission
c. The law does not specify time within which the licensing
authority should reply to the application for consent
or notification of change of control, however in our
experience it may take between 7-14 working days

Mining events in Tanzania

Tanzanian explorers club
The Tanzanian Explorers Club (TEC) is for people working
in, or affiliated with, the Tanzanian mineral exploration
sector and provides an informal environment to facilitate
networking within the industry and information sharing
between key participants in the Tanzanian mining sector.
If you are interested in joining the next TEC meeting please
email Clyde & Cos mining team to find out further details.

Contact us

Amalia Lui

This monthly briefing is prepared for

clients and contacts of Clyde & Co
operating in the mining sector in Tanzania.
We aim to keep our clients abreast of
developments in the sector as they happen
and if you have any questions on the issues
raised above please contact us using the
details provided:

Associate, Dar es Salaam

Clyde & Co Tanzania

11th Floor, Golden Jubilee Towers
Ohio Street
P.O. Box 80512
Dar es Salaam, Tanzania

Peter Kasanda

E: amalia.lui@clydeco.com
T: +255 768 983 026

Michael Strain
Senior Associate, Dar es Salaam
E: michael.strain@clydeco.com
T: +255 767 850 052

Partner, Dar es Salaam

E: peter.kasanda@clydeco.com
T: +255 767 850 056