Graphite Mining Licence in Tanzania: Costs, Requirements and Buyer Risks

Graphite Mining Licence in Tanzania is a key regulatory requirement for investors seeking to explore or develop graphite projects in the country. Graphite exploration is conducted under a prospecting licence, while commercial production requires the appropriate mining licence or special mining licence.

A graphite prospecting licence is not a permanent asset. It is a time-limited and conditional mineral right, and the Mining Commission has several mechanisms through which it can expire, be surrendered or become difficult to renew.

For investors, lenders and buyers assessing a graphite project, this distinction matters. A prospecting licence with a short remaining term, an outstanding minimum expenditure obligation or unresolved surface-right issues may be considerably less valuable than its geological potential suggests.

This guide explains the graphite mining licence structure in Tanzania, applicable fees and expenditure requirements, ownership restrictions, government participation, royalties, transfers and the principal due-diligence issues investors should examine before acquiring or financing a graphite project.

The analysis is based on the Mining Act, Cap. 123, the Mining (Mineral Rights) Regulations, 2018 (GN 1 of 2018) and the applicable fee schedule, including GN 47 of 2018, together with the other regulations referred to below.

1. How mineral rights are organised in Tanzania

Mineral rights in Tanzania are administered by the Mining Commission, including through the mining cadastre.

An application for a prospecting licence generally involves identifying available ground, preparing coordinates on the Arc 1960 datum and submitting the required corporate, tax, technical, financial, local-content, integrity and prospecting-programme documentation.

An applicant is subject to limits on the number and total area of prospecting licences it may hold. The article’s source framework identifies a maximum of 20 prospecting licences or 2,000 square kilometres, subject to the applicable rules.

The availability of the ground is therefore one of the first issues a prospective investor should verify before spending significant money on a project.

2. Graphite prospecting licence in Tanzania

Graphite is treated as an industrial mineral for the fee, expenditure and royalty framework discussed in this article.

2.1 Term and area

A prospecting licence is the principal exploration right.

Under the framework considered here, a prospecting licence may initially run for up to four years. The first renewal may run for three years and the second for two years, with a further period available for completion of a feasibility study.

The relevant regulations also limit the area of a prospecting licence. For industrial minerals, the maximum area identified in the source material is 300 square kilometres, with relinquishment requirements applying on renewal.

A holder should therefore not treat the original licence area as an area that can automatically be retained indefinitely.

2.2 Obtaining the licence

Once an application is accepted, the Mining Commission may issue an offer letter. The applicant then pays the applicable preparation fee and annual rent before the licence is issued.

Surface rights must also be addressed before exploration begins.

Where a landowner refuses consent without proper grounds, the Mining Act provides a mechanism through which exploration may be permitted, while compensation obligations relating to surface rights remain relevant.

For an investor acquiring an existing licence, unresolved landowner or compensation issues should therefore be treated as a transaction-risk item.

2.3 Government fees and annual rent

The fee schedule identified in the source material provides the following figures for an industrial-mineral prospecting licence:

Application fee: USD 200
Preparation fee: USD 300
Initial annual rent: USD 100 per square kilometre
Annual rent after first renewal: USD 150 per square kilometre
Annual rent after second renewal: USD 200 per square kilometre
Certificate of suspension of work: USD 200
Certificate of surrender: USD 500

The applicable Tanzanian-shilling equivalent is determined according to the applicable government conversion mechanism and payment requirements.

For a maximum 300-square-kilometre area, the initial annual rent would therefore be USD 30,000, before considering other project costs and obligations.

3. Minimum expenditure obligation

One of the most important issues when buying or financing a graphite prospecting licence is the minimum expenditure obligation.

The source material identifies the minimum expenditure for industrial minerals and building materials at USD 100 per square kilometre.

A licence approaching expiry with a significant expenditure shortfall may face difficulties during renewal.

This creates an important acquisition principle:

Do not value a graphite prospecting licence solely on the basis of its geological report.

A buyer should also establish:

how much time remains on the licence;
whether renewal is available;
whether the renewal application has been filed within the required period;
whether the minimum expenditure has been satisfied;
whether the expenditure can be properly substantiated; and
whether there are outstanding regulatory obligations.

A buyer may otherwise acquire a licence together with an unresolved renewal problem.

4. Retention licences

Retention licences should not be treated as a mechanism for simply parking a graphite prospecting licence while an investor waits for financing or market conditions to improve.

The source material notes that the Mining (Mineral Rights) Regulations, 2018 cancelled retention licences then in force and the relevant areas reverted to the Government.

Accordingly, investors should structure exploration and financing plans around the actual prospecting and renewal periods.

5. Primary mining licence

A primary mining licence is fundamentally different from a prospecting licence and is subject to strict ownership restrictions.

Under section 8(2) of the Mining Act, a primary mining licence is reserved for:

Tanzanian citizens; and
companies whose members, directors and control are exclusively Tanzanian.

The maximum area identified in the source material is 10 hectares, and the licence runs for seven years and may be renewed.

A foreign investor considering a graphite project must therefore distinguish carefully between a prospecting licence and a primary mining licence.

Foreign investors and primary mining licences

A foreign investor should not assume that acquiring control of a Tanzanian company holding a primary mining licence is equivalent to acquiring an ordinary corporate asset.

The ownership and control restrictions can directly affect the validity and security of the mineral right.

For this reason, the corporate structure should be reviewed before signing a share purchase agreement or other acquisition document.

6. Mining licence in Tanzania

A mining licence covers medium-scale mining operations.

The source material identifies the relevant capital investment range as USD 100,000 to USD 100 million.

The licence may run for up to 10 years and may be renewed for a further period of up to 10 years.

The area is capped at 10 square kilometres.

For industrial minerals such as graphite, the source material identifies:

Application fee: USD 2,000
Preparation fee: USD 1,000
Renewal fee: USD 2,000
Annual rent: USD 2,000 per square kilometre

Before grant, the applicant must address matters including:

feasibility study;
environmental approval;
local content plan; and
community plan.

The transition from exploration to mining therefore involves considerably more than simply applying for a new licence.

7. Special mining licence

A special mining licence applies to large-scale operations.

The source material identifies the threshold as USD 100 million or more in capital investment.

A special mining licence may run for the life of the ore body or the requested period, whichever is shorter.

The area is generally capped at 35 square kilometres, with the source material identifying a higher limit for certain superficial deposits.

The identified fees are:

Application fee: USD 5,000
Preparation fee: USD 2,000
Renewal fee: USD 5,000
Annual rent: USD 5,000 per square kilometre

A project of this scale also requires careful analysis of state participation, local content, financing, environmental compliance and community obligations.

8. Government participation in graphite mining

Government participation is one of the most important factors a foreign investor should include in the financial model.

Section 10 of the Mining Act provides for not less than 16% non-dilutable free carried interest in the holder of a mining licence or special mining licence.

The Government’s total shareholding may reach 50% where the additional participation is connected with tax expenditure.

The Mining (State Participation) Regulations, 2022 provide the framework for this participation, including the relevant framework agreement, shareholders’ agreement and prescribed articles.

Why this matters to a buyer

A buyer valuing a graphite project should not calculate its expected return as though the investor automatically owns 100% of the economic interest.

The Government’s free-carried interest must be incorporated into the project’s capital structure and financial model.

The Lindi Jumbo project in Ruangwa illustrates the practical importance of government participation in a Tanzanian graphite project.

9. Local content and Indigenous Tanzanian Company requirements

Mining projects are also subject to Tanzania’s local-content framework.

The source material identifies an Indigenous Tanzanian Company as a company with at least 51% equity ownership by Tanzanian citizens and at least 80% Tanzanian citizens in executive and senior management positions.

The local-content framework can affect:

ownership;
procurement;
employment;
management;
financing;
contracting; and
the structure of a mining investment.

Attempting to create nominal local ownership merely to circumvent statutory requirements creates significant regulatory and transaction risk.

Fronting can attract serious penalties.

10. Processing, export and value addition

Mining the graphite is only one part of the regulatory chain.

Processing, smelting, refining, dealing and brokerage may each require their own regulatory approvals or licences.

Graphite exports are also subject to the applicable export and value-addition requirements.

The source material identifies a 65% total graphitic carbon standard for graphite concentrate that may be exported after the relevant testing and payment requirements are satisfied.

For a graphite project, the business model should therefore examine the entire chain:

Exploration → Mining → Processing → Storage → Sale → Export

A licence that permits exploration does not automatically authorise all subsequent commercial activities.

11. Graphite royalty and other charges

The source material identifies a 3% royalty on gross value for minerals within the industrial-minerals category, which includes graphite.

In addition, the following charges are identified:

1% inspection fee on gross value;
0.1% mining levy on gross value; and
0.3% local government service levy on turnover.

These costs should be included in the project’s financial model rather than treated as incidental expenses.

For an investor assessing a graphite mine, the correct question is therefore not simply:

“What is the price of graphite?”

The more important question is:

“What is the project’s net economic return after government participation, royalty, inspection charges, levies, tax, financing costs, local-content obligations and operating expenditure?”

12. Transfer of a graphite mining licence

A mineral right is not an ordinary corporate asset that can always be transferred freely.

Section 9 of the Mining Act provides for assignment of mineral rights and requires the applicable regulatory consent.

Transfers of prospecting licences and changes of control of the company holding the mineral right therefore require careful regulatory analysis.

The source material identifies a USD 3,000 transfer fee for transferring a mineral right other than a primary mining licence, together with USD 500 for registration or approval of a document by the Mining Commission.

Acquisition agreements

For a buyer, Mining Commission approval should be treated as a condition precedent to completion where required.

The sale agreement should also contain:

appropriate representations and warranties;
regulatory approval conditions;
a long-stop date;
disclosure requirements;
liability for pre-completion regulatory breaches; and
provisions dealing with outstanding licence obligations.

This is particularly important where the transaction involves a change of control rather than a straightforward transfer of the mineral right.

13. Tax considerations

The source material identifies the following principal tax rates:

Corporate income tax: 30%
Withholding tax on dividends to a non-resident: 10%
Withholding tax on dividends from a company listed on the Dar es Salaam Stock Exchange: 5%
Withholding tax on interest: 10%

The tax treatment of a transaction can differ depending on whether an investor acquires:

shares in the mining company; or
the underlying assets.

Investors should therefore model the acquisition structure and eventual exit together.

A structure that appears cheaper at entry may produce a materially different tax result at exit.

14. Graphite Mining Licence Due-Diligence Checklist

Before acquiring, financing or investing in a graphite project in Tanzania, a buyer should obtain and review at least the following:

Mineral right

Certified copy of the licence
Current Mining Commission/cadastre search
Licence area and coordinates
Expiry date
Renewal history
Current renewal status
Encumbrances and competing applications

Expenditure

Minimum expenditure obligation
Actual exploration expenditure
Supporting expenditure records
Outstanding expenditure shortfalls
Previous regulatory correspondence

Land and community

Surface-right arrangements
Landowner consent
Compensation obligations
Community arrangements
Existing disputes or claims

Corporate ownership

Current shareholders
Directors
Ultimate beneficial ownership
Whether the licence is subject to Tanzanian ownership restrictions
Local-content compliance

Government participation

Applicable free-carried interest
State participation arrangements
Shareholders’ agreement
Framework agreement
Any additional government participation

Regulatory approvals

Environmental approvals
Local-content plan
Community plan
Mining Commission approvals
Export approvals
Processing/value-addition approvals

Commercial and financial

Feasibility study
Geological reports
Resource and reserve information
Existing financing
Royalties and levies
Tax position
Existing contracts
Offtake arrangements

Transaction

Required Mining Commission consent
Transfer fee
Change-of-control implications
Conditions precedent
Long-stop date
Representations and warranties
Regulatory liabilities

15. Frequently Asked Questions

Can a foreign company hold a graphite licence in Tanzania?

Yes, foreign companies may hold prospecting licences, mining licences and special mining licences subject to the applicable local-content and state-participation requirements.

A primary mining licence is subject to Tanzanian ownership and control restrictions.

How much does a graphite prospecting licence cost in Tanzania?

For an industrial-mineral prospecting licence, the source material identifies a USD 200 application fee, USD 300 preparation fee, and initial annual rent of USD 100 per square kilometre.

At the maximum 300-square-kilometre area, initial annual rent would be USD 30,000.

The licence also carries a minimum expenditure obligation.

How long does a graphite prospecting licence last?

The initial period is up to four years, followed by potential renewals of three years and two years, with a further period potentially available for completion of a feasibility study.

How much of a graphite mine does the Tanzanian Government take?

The Mining Act provides for not less than 16% non-dilutable free-carried interest in the holder of a mining licence or special mining licence.

Additional government participation may apply under the applicable state-participation framework.

What royalty applies to graphite in Tanzania?

The source material identifies a 3% royalty on gross value for industrial minerals, together with a 1% inspection fee and 0.1% mining levy.

A 0.3% local government service levy on turnover is also identified.

Can a graphite prospecting licence be sold?

A transfer may be possible, but the required regulatory consent must be obtained.

The source material identifies a USD 3,000 transfer fee for a mineral right other than a primary mining licence.

A change of control of the company holding the licence should also be assessed for regulatory approval requirements.

Can graphite concentrate be exported from Tanzania?

Yes, subject to the applicable export, testing, royalty and value-addition requirements.

The source material identifies a 65% total graphitic carbon standard for graphite concentrate eligible for export under the relevant value-addition framework.

Conclusion

A graphite licence in Tanzania should not be valued simply by looking at the size of the licence area or the geological potential.

For an investor or buyer, the real value depends on the remaining licence term, renewal prospects, expenditure compliance, land and community position, ownership structure, local-content obligations, government participation, taxation, royalties and the ability to obtain regulatory approval for the proposed transaction.

The most important due-diligence principle is simple:

A mineral right is only as valuable as the legal and regulatory position supporting it.

Before acquiring or financing a graphite project, investors should conduct a full review of the mineral right, corporate structure, regulatory approvals, land position, expenditure obligations and transaction requirements.

GERPAT Solutions provides business advisory and regulatory compliance support in Tanzania, including mining-related corporate structuring, licensing coordination, regulatory due diligence, investment advisory and corporate compliance.

GERPAT Solutions
Tanzania & Zanzibar Business Advisory and Regulatory Compliance
IP | CORPORATE | INVESTMENT | COMPLIANCE

Disclaimer: This article is for general information only and does not constitute legal advice. Mining laws, regulations, fees and government requirements may change. Investors should obtain project-specific professional advice and confirm applicable requirements with the relevant authorities before taking action.

Graphite Mining Licence in Tanzania: Costs, Requirements & Risks