GEITA Gold Mine Limited (GGML) has issued a 90-day ultimatum to all foreign companies that supply it with goods and services to comply with the local content regulations or lose the lucrative business.
The mining company, the country’s largest gold producer in the country, issued the ultimatum in its resolve to ensure 81 per cent of its goods and services are procured from within the country by December, this year.
GGML spends a total of 449million US dollars (over 1.04trn/) annually on goods and services, however, a chunk of the monies ends up in foreign-owned companies, thus limiting the company's effectiveness in complying with local content law.
The giant gold firm said it is targeting to ensure 81 per cent of its goods and services are procured from the country by December this year.
GGML's Business Development Specialist, Reward Tenga told a business forum involving miners, businesspeople, financial institutions, and the government during the Geita International Mining Machinery, Technology and Investment expo held at Bombambili grounds in the outskirts of the town.
Mr Tenga said the firm has written letters of notice to 73 companies, demanding them to explain how they comply with the state's mining (Local content) (amendments) regulations of 2019. "We have service contracts with 53 foreign companies.
“We have directed them to ensure they comply with the local content regulations or forget extending their contracts," he said. Three foreign companies including Capital Drilling and AMS have begun complying with the regulation.
The specialist detailed that although some companies have a certificate of compliance, their registrations are in the offshore countries.
The regulations require foreign companies referred to as non-indigenous Tanzanian companies to have a minimum of 20 per cent of the company's share held by citizens to qualify to provide goods or services in the mining sector.
According to Tenga, of the total spending, about 331million US dollars (over 768.4bn/-) qualify to be retained for local content but it may be found that only eight per cent of companies involved are from Geita.
“Our target also is to increase Geita -based companies to reach at least 10 per cent," he said, adding; “In some cases, using foreign products cannot be avoided.”
He said products such as chemicals are only manufactured abroad and therefore limiting the company's ability from out-sourcing such goods in the country.
The mining company acknowledged that it is overly expensive importing goods and services from a foreign country and that it is open for discussion and suggestions to better improve local content.
Joseph Mangilima, GGML's Manager for Community Affairs said the company had made headways in implementing local content.
GGML, which produces 40 to 50kilogrammes of gold daily, has employed 3,500 staff. Mangilima said the giant gold producer pays three per cent service levy to the Geita Council and Geita Town Council. Between 2018 and 2020, he said the company has been paying over 9bn/- every year as part of its 0.7 per cent of its gross revenue.
"About 70 per cent of managers at the company are Tanzanians. We aim to increase procurements to over 80 per cent... this calls for local businesspeople to ensure they improve their products and services to meet the acceptable standards," he said.
Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) Geita Regional Chairman Eng Chacha Wambura faulted GGML procurement policy, saying it has been sidelining local businesspeople.
He urged the company to set up a conducive environment and fair playing grounds between foreign companies and locals when floating tenders.
"Consider placing us together with a manufacturing company in Dubai, India or China in a bid. It is obvious their products will be cheaper than ours," he said. "As local businesspeople we buy the same goods from the manufacturer that you want us to compete with for same tender."
The chairman warned, however, Tanzanians winning bids to supply goods and services to exercise diligence and professionalism that could encourage the buyer rather than discouraging and thus pushing them to outsource the same service from the foreign company.
Assistant Mining Commissioner Terence Thomas said the government decision to review the mining law has transformed the entire sector which includes legalising and setting up regulatory frameworks for corporate social responsibilities among companies.