In a move that could significantly reshape Tanzania’s mining sector, Deputy Minister for Finance, Hamad Hassan Chande, revealed that the government is considering legal amendments to allow major mining companies to list on the Dar es Salaam Stock Exchange (DSE). This potential shift comes in response to a parliamentary query from Singida North lawmaker, Ramadhan Ighondo, who questioned why companies like Barrick, Geita Gold Mine (GGM), and Shanta Gold should not be listed on the DSE, given that they are required to issue shares of Free Carried Interest (FCI) to the government.
Chande’s response was measured yet open to the idea, stating, “We understand that such companies holding Mining Licences or Special Mining Licences (SMLs) ought to issue Shares of Free Carried Interest (FCI) to the government, therefore, why shouldn’t the same government allow that they be listed in the stock exchange?” This statement signals a willingness to explore the benefits and implications of such a move, which could have far-reaching effects on the mining industry and the broader economy.
The current legal framework in Tanzania mandates that mining companies grant the government a minimum of 16% non-dilutable free carried interest shares. This requirement is part of a broader effort to ensure that the government has a stake in the country’s mineral wealth. However, the idea of listing these companies on the DSE adds a new dimension to this strategy. It could potentially increase transparency, improve corporate governance, and provide the government with a more liquid and market-driven valuation of its shares.
Chande highlighted several advantages of listing companies on the stock exchange, including increased capital, improved efficiency and productivity, and the ability for the government to obtain appropriate revenue. He also noted that listing would enable the recognition of the true value of shares, provide citizens with the opportunity to buy shares, and allow investors to sell their investments when needed. “The stock market also offers opportunities for investors who wish to sell their investments when they need money,” Chande said, underscoring the potential benefits for both the government and individual investors.
However, the deputy minister also acknowledged the challenges faced by companies that are not listed on the stock exchange. “Shareholders of a company that is not listed on the stock exchange face challenges in not knowing the true value of their investments due to lack of liquidity of their shares,” he explained. This lack of transparency can prevent the government and shareholders from obtaining appropriate information regarding business operations and finances, potentially leading to inefficiencies and mismanagement.
The potential listing of major mining companies on the DSE could spark a wave of reforms in the sector. It could encourage other companies to improve their corporate governance practices, increase transparency, and seek listing to attract more investors. This could, in turn, boost the overall performance of the DSE, making it a more attractive destination for both local and international investors.
Moreover, the move could have significant implications for the government’s revenue streams. By having a stake in listed companies, the government could benefit from market-driven valuations and potentially increase its revenue through dividends and share sales. This could be particularly important in a sector where the government has a vested interest in ensuring that the country’s mineral wealth is exploited for the benefit of its citizens.
However, the path to listing major mining companies on the DSE is not without its challenges. The government will need to engage with stakeholders, including mining companies, investors, and regulatory bodies, to ensure that the legal and regulatory framework is robust and conducive to listing. This process could take time, but the potential benefits make it a worthwhile endeavor.
In the meantime, the mining industry in Tanzania will be watching closely to see how this development unfolds. The potential listing of major mining companies on the DSE could be a game-changer, not just for the mining sector, but for the broader economy as well. It could pave the way for increased investment, improved corporate governance, and greater transparency, all of which are essential for sustainable economic growth. The coming months and years will be crucial in determining how this potential shift plays out and what it means for the future of mining in Tanzania.