Tanzania: Will mining tax exemption benefit nation or a handful of leaders?

• Tanzania has just passed mining tax exemption law binding the country to reinvest 10% of mining revenue to exploration even as authorities seek to attract new investors.

Tanzania has passed mining Tax Exemption laws effectively mandating authorities in the East African country to allocate 10% of all mining revenue for new exploration through the Mineral Research Fund. This legislation is however giving rise to question whether the move will develop the sector or it only serves to give international companies leeway into the country’s mining sector and enrich a few government leaders.

Analysts content that the 10% reinvestment law specifically targets unveiling of potential critical minerals to meet growing global demand as Dodoma hopes the resulting geological data will unlock new mineral discoveries and attract more investments.

“The government has approved the allocation of 10% of mining revenue to strengthen advanced exploration work. This will allow us to gain a deeper understanding of the country’s mineral resources and open up new investment opportunities,” Mining Minister Anthony Mavunde told parliament.

“Tanzania’s decision to allocate 10% of mining revenues to exploration marks a strategic shift from simply collecting resource rents to using them as a catalyst for long-term sector growth and industrialization,” highlights Charles Mmasi in a Bowman’s analysis of the reforms.

According to the report, Tanzania’s mining revenue already exceeds expectation. In the current fiscal year, Tanzania reported $515 million in mining revenues surpassing its annual target.

According to government data, as of 22 June, the Ministry of Minerals had collected $515 million, exceeding by far its annual target of $458 million just before the end of the 2025/2026 financial year. The exceptional revenue generated by the sector has motivated policymakers to pass the 10% reinvestment law in hope of raising even more earnings.

Tanzania legislators are of the view that while there is significant progress in mapping its mineral resources, there still remains major information gaps which if bridged, may very well unveil the existence of more mineral deposits.

Official statistics show that government data says 97% of geological mapping has been completed, and low-resolution surveys have achieved full coverage. Additionally, geochemical surveys have covered 24% of the country with roughly 16% of Tanzania having undergone high-resolution exploration.

Given this data, it means that approximately 84% of the country’s 945,000 square kilometres remain unexplored using modern, detailed survey methods. “After 101 years, a new chapter is being written in Tanzania’s mineral exploration history,” Mining Minister Mavunde told lawmakers.

The minister said Tanzania is looking to use part of its mining revenues as strategic investment capital to strengthen its geoscience base and reassure investors. Notably, improved geological information serves to lower exploration risk, encourage fresh capital inflows and support downstream mineral processing industries.

According to the government, policy is timely given the intensifying global competition for critical minerals that are used in the production of electric vehicle batteries, renewable energy technologies and advanced manufacturing.

“Tanzania’s exploration drive is a calculated response to growing demand for battery metals and rare earth elements, all of which are increasingly central to global supply-chain security strategies,” he said.

The minister emphasized that as global demand for critical minerals accelerates, Tanzania must make the most of its geological potential to develop its mining sector and secure its place in global commodity markets. “Expanding high-resolution exploration increases Tanzania’s credibility as the choice destination for mining investment,” he underscored.

The initiative also strengthens Tanzania’s negotiating position with multinational mining companies since it broadens the country’s portfolio of proven mineral assets and also increases transparency as well as showcases the country’s resource potential.

“If successful, the strategy could draw greater investor attention to East Africa and diversify mineral supply chains that have historically been concentrated in Southern Africa,” the Bowman’s report explains.

However, experts warn that funding alone does not mean success; “Execution will depend on technical expertise, institutional capacity and governance standards capable of converting exploration spending into commercially viable discoveries,” details the report.

Also, transparent management of exploration programmes and efficient deployment of resources will be critical to maintaining investor confidence. That be as it may, it remains true that for now, Tanzania’s move, reinvesting 10% of its mining revenue for exploration, sends a clear message that it intends to compete not only as a producer of critical minerals but as a leading destination for exploration capital.

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Tanzania mineral sector Tax Exemptions, to revamp sector or enrich a few?

Tanzania says Tax Exemptions in the mining sector will attract new investments and marks a shift away from resource nationalism, a highlight of the previous administration under the late President John Magufuli. Analysts say, the mining sector reforms suggest that Tanzania is positioning itself as a long-term destination for mining capital.

In contrast the Democratic Republic of Congo (DRC), for example, which supplies over 60% of the world’s cobalt placed a cap in cobalt export at 18,125 tonnes for the year 2025. “The system of caps and quotas demonstrate DRC’s influence over global cobalt markets, in contract, Tanzania’s strategy offers investors regulatory predictability, geological knowledge, and downstream value addition,” Mmasi notes in the reform analysis.

By making Tax Exemption a law, it means investors are reassured that there will not be changes in policy allowing them to make long term investment. Unlike the DRC, Tanzania’s reforms seek to move away from controlling supply an instead the country is looking to provide investors with assurance to make long-term investments in the country.

“Whether this approach ultimately succeeds hinges on implementation. Government will need to empower institutions to oversee the policy changes, address auditing gaps, and fix delayed approvals due to understaffing,” cautions Mmasi.

Questions remain about how the new Framework Agreement provisions will operate in practice, including what documentation investors will require, what equitable economic sharing means, and whether the rules will apply to existing agreements.

However, the direction of travel is increasingly clear. At a time when governments and manufacturers are seeking alternative sources of critical minerals, Tanzania is signaling that its competitive advantage may lie not in controlling supply but in providing the certainty required to attract long-term investment.

The mining sector reforms come at a time when global investors are looking for new exploration options to sideline China’s current control of the sector.

Notably, critical minerals account for approximately 55% of Tanzania’s total national mineral export value, making it the third-largest industry in the country and placing Tanzania firmly as the leading mining economy in East Africa.

Tanzania’s reforms to its Framework Agreements reduce regulatory uncertainty and that way, reassure investors and also simplify implementation of tax incentives for large-scale mining projects.

The fact that China controls 90% of global processing and refining capacity for critical minerals has competitors like the US nervous and keen to lobby with exporting countries like Tanzania to secure their own presence.

As competitors look to diversify away from Chinese controlled critical minerals, countries like Tanzania are looking to position themselves as key destination for both domestic and international mining investment.

Under the proposed reforms, tax exemptions contained in the Framework Agreements will no longer require additional Government Notices before taking effect.

By embedding the exemptions into law, Tanzania reduces uncertainty that has previously complicated investment planning for large-scale mining projects.

“For investors considering multi-billion-dollar commitments over many years in rare earths and other critical minerals, regulatory certainty can be as important as the incentives themselves,” writes Joe Giesen, an analyst for Minerals Africa Initiative (MAI).

Furtherstill, the Framework Agreements have introduced detailed institutional mechanisms, and treaties that are specific to particular mining companies.

Also, the removal of Government Notices (GN) at the local level removes bureaucratic red tapes and serves to end corrupt networks.

Also, the allocation of 10% of its gross mineral revenue to the Mineral Research Fund will support small-scale miners who generate almost 40% of the country’s mineral revenue, yet often lack information and access to modern mining techniques.

Based on these arguments, the reforms are expected to attract investors by reducing cost of production and investment as mentioned, but on the other hand, critics query whether the tax exemptions will benefit only a handful of government leaders.