CRB Africa Legal has carved a niche for itself as the leading Tanzanian law firm representing mining companies.
You have an extensive background in the mining industry and were particularly involved in the 1998 Mining Act. How did this come about, and how did it change Tanzania?
In 1998, the government wanted to open the industry to international investors. There was already a mining act but no corresponding mining policy. Such a policy was therefore put in place to go with a new mining act and a proper fiscal regime to encourage foreign investors. We organized an international summit to discuss the policy, and worked with an international advisory team from London. It took three years to generate the policy. My firm was consulted on how to write the new act, which came into place in 1999. The new act brought big changes – traditionally we were a command economy, with all major economic activity in the hands of the government. After 1999, big companies like Barrick Gold, Ashanti and AngloGold arrived and started prospecting for gold; in the following decade we had six senior miners active in the country.
How was CRB Africa Legal established and where does the mining sector fit into its portfolio?
I used to work for a financial institution. In 1993, I left my job and initially set up a law firm known as Maajar & Rwechungura Law Office, which later became Rex Attorneys. I retired from Rex in 2009 to establish CRB Africa Legal. While at Rex, because we were part of the team that built the new mining act and policy, we were well regarded by most senior investors, we built a good portfolio in mining. It is that experience which I brought into CRB Africa Legal. More recently, we have seen the entry of big international law firms into the market, so there is now much more competition.
We also had plenty of activity with the influx of financial institutions and takeover of state-owned assets. Privatization brought a lot of work in mergers and acquisitions generally. Later, all the acquired companies had to offer a certain percent of their shares to the public through the stock exchange; still today, CRB Africa Legal has a sizeable portfolio in the capital markets. Our work is a mix of interlocking specialties. In mining my biggest client is Shanta Gold. I am kept busy by its two projects: Singida is still in the prospecting phase but moving toward a special mining license, while Luika in the south is becoming a major gold mine. Other work in mining is on a piecemeal basis. Big firms like Barrick Gold will use local law firms only marginally for Tanzanian law issues.
The balance between securing tax revenue and incentivizing investment has been a sensitive issue in Tanzania. How do you see it developing as time goes by?
Quite frankly, Tanzania is going through a political phase where its economic management is somewhat confused. We are going through a very uncertain phase concerning the taxation regime and regulatory approvals, and it seems the new president is more interested in collecting taxes than promoting and incentivizing industry; the balance is not quite right. We talk about encouraging investors to come, but in the same breath insist they must pay heavy taxes. The market is therefore a little jittery, and some producers are scaling down operations. However, we still have political stability and do not expect upheaval from host communities.
The tendency will be for more people wanting to exit Tanzania – they may undersell their assets and not realize their full value. Ownership of assets may move offshore, as a means to avoid paying capital gains tax, but at some point the government will probably clamp down on this.
In 2012 you mentioned that coal should be the fastest growing sub-sector of the mining industry. What are your thoughts on this now?
A lot has happened since 2012. One gold mine, of Resolute Mining, closed because it ran out of resource. Barrick Gold has also devolved its nickel projects, as the commodity has fallen in price and, with the Chinese discovery of synthetic nickel, there is no way it will go back up. However, Tanzania has discovered quite a lot of coal, and this is still the next big thing. We also have uranium and gemstones, most prominently diamonds, tanzanite and ruby.
How will CRB Africa Legal continue to maintain its leading position in the mining sector?
CRB Africa Legal entered the mining industry very early and cut a good niche in the market. Some of us also contributed to business surveys and publications, and we attended major conferences regularly. This put our name on the map, and we have a good reputation as a firm and as individuals. However, our firm still has room for improvement. We have the potential to get more business, but we currently do not have the in-house capacity to manage it as efficiently as we would want. Clearly, we need to expand this capacity as quickly as possible. Tanzania has a small legal community that is experienced in the large-scale commercial transactions; there is not a large pool of available lawyers with such skills. In general, Tanzania is still a very good place for investors, and we hope to see CRB Africa Legal to grow alongside the mining sector.