National Gold and Gemstone Reserve is now Set to Operate

Pursuant to the provisions of section 27D of the Mining Act, on 30 June 2024, the Minister for Finance (the Minister) issued the Mining (National Gold and Gemstones Reserve) (Establishment) Order, 2024 (the Order). This follows the requirement under section 27D of the Mining Act under which the Minister for Finance is required, after consultation with the Mining Commission and the Governor of the Bank of Tanzania (BoT), by order published in the Gazette, to establish the National Gold and Gemstone Reserve (the Reserve), in which should be deposited all royalties required to be paid in refined minerals; all minerals impounded or otherwise confiscated in accordance with the law; minerals purchased by the Government in accordance with the provisions of the Mining Act; dividend minerals paid under any arrangement or agreement; and any minerals otherwise acquired by the Government. The Order establishes the Governing Board which is responsible to ensure the growth and sustainability of the Reserve.

Purposes and Sources of the Reserve

Under the Order, establishment of the Reserve is intended to preserve gold and gemstones in order to address both the current needs during the state of emergency and future national needs contributing towards achievement of sustainable development goals. This communicates the need, as per other resources-rich countries, to ensure that minerals are extracted not only for current and future generations but also to finance other Government activities when in need, including budgetary needs.  Just like under section 27D of the Mining Act, the sources of the Reserve are: (i) refined minerals paid as royalty in kind pursuant to the requirement of the Mining Act; (ii) minerals impounded or otherwise confiscated in accordance with the law; (iii) minerals purchased by the Government in accordance with the provisions of the Mining Act; (iv) dividend minerals paid under any arrangement or agreement; and (v) minerals otherwise acquired by the Government.

Management of the Reserve

While the BoT is responsible for control and management of the Reserve; custodianship of all gold and gemstones deposited into the Reserve; and advising the Minister and the Board in all matters related to the effective management of the Reserve, the Minister has the overall oversight role in the performance of the Reserve. In that regard, the Minister should receive reports from the Reserve Board for noting, authorisation or guidance.

Procedures for Deposit of Minerals into the Reserve

In the case where the Ministry intends to deposit minerals to the Reserve, it should notify the BoT in writing. This Ministry’s notification should be signed by the authorised officer of the Ministry; submitted at least one working day prior to the day of deposit; indicating the group, type, quantity and purity level of minerals intended to be deposited; indicating the names of authorised officers from the Ministry and the Mining Commission designated to escort the minerals.

The Order requires the authorised officer of the Mining Commission to break the seal and open the parcel containing minerals for the purpose of conducting physical verification of minerals with the view to ascertaining their authenticity. Further, the Mining Commission is required to ensure that there are authorised officers involved in the verification of minerals depending on the circumstances to safeguard the integrity of the process. Upon completion of the procedures for deposit, the Mining Commission executes and issues a mineral certificate in the form to be determined by the BoT.

Disposal of Reserved Minerals

The Board may, upon approval of the Minister, at any time, dispose of, by way of sale, minerals deposited in the Reserve. Despite this, the Board should not sell the whole amount of minerals available on the Reserve. All this is intended to ensure that the Reserve remains with minerals in view of addressing both the current needs during the state of emergency and future national needs contributing towards achievement of sustainable development goals. It is worth noting that in selling minerals available on the Reserve, the BoT shall have the first right of purchase. Despite this, the Minister may, upon consultation with the Board, authorise utilisation of the Reserve. Such utilisation should be for purchase of gold or gemstones to boost the Reserve; and funding the Government expenditure upon state of emergency approved by the Cabinet.

Lastly, the Board is required to take insurance cover for minerals during transportation to, and custody in the Reserve. The BoT should, after consultation with the Ministry, determine the appropriate insurance cover for the minerals.

Copy of this Legal News can be accessed by clicking here

Copy of the Order of the Court can be accessed by clicking here