Infrastructure Sharing in Mining Corridors: Contracting and Regulatory Issues in Tanzania

Tanzania’s rich endowment of mineral resources, including gold, graphite, coal, nickel, and uranium, continues to attract significant investment in the extractives sector. However, many of these resources are located in remote inland areas, far from ports and export infrastructure.

To unlock the full economic potential of these deposits, large-scale transport and energy infrastructure is required. Shared infrastructure in mining corridors presents a strategic and cost-effective solution for developers, Governments, and communities. However, it also raises a range of legal and regulatory considerations that must be carefully managed.

In this month’s legal update, we explore the legal, regulatory, and contractual issues surrounding infrastructure sharing in Tanzania’s mining corridors, with a focus on the opportunities and challenges involved in this area.

Legal Framework

The mining sector is primarily governed by the Mining Act, Cap 123 R.E. 2023. However, infrastructure sharing in mining corridors covers several sectors hence necessitating supplementary governance under the following laws:

1. The Public Private Partnership Act, Cap. 103 R.E. 2023 which provides a framework for joint development of infrastructure between the public and private sectors. Public-Private Partnerships (PPPs) are a preferred model for large infrastructure undertakings in Tanzania.
2. The Land Act, Cap. 113 R.E. 2023 (the Land Act) and the Village Land Act, Cap. 114 R.E. 2023 which govern land access and acquisition, including servitudes and wayleaves for infrastructure projects.
3. The Environmental Management Act, No. 20 of 2004 (as amended) (the EMA) which requires environmental impact assessments for shared infrastructure, especially where multiple stakeholders are affected.
4. The Land Transport Regulatory Authority Act, Cap. 413 R.E. 2023 which regulates standards and third-party access in the land transport sector.

Key Contracting Issues in Shared Infrastructure Projects within Mining Corridors

The effective development and operation of shared infrastructure in mining corridors such as roads, railways and power lines, requires clear and robust contractual frameworks. These contracts must balance the operational needs of mining companies with the interests of other users, regulators, and host communities.

The current legal framework governing this subject does not stipulate key contracting issues to be considered in infrastructure projects within mining corridors. However, based on practical experience, we have highlighted some key issues below and proposed a contractual solution for each issue. Please note that addressing these issues during the contracting stage is essential to promote sustainability, ensure efficient operations, and provide legal certainty for all parties involved.

1. Access rights and capacity allocation

One of the most important aspects of a shared infrastructure agreement is clearly setting out who is allowed to use the infrastructure, how much space or capacity each user is entitled to, and the rules for accessing and using it. For example, if several mining companies are sharing a railway or road, the contract should explain:

• which users have access, and whether that access is exclusive or shared;
• how capacity is divided, such as how many tonnes per day each company can transport;
• who gets priority if there is limited capacity at certain times;
• how users request access (known as nomination procedures); and
• whether users can reserve space in advance or transfer their unused capacity to others.

These details help prevent confusion and ensure the infrastructure is used efficiently without causing disputes among the users.

2. Ownership and operation models

It is crucial for all parties involved in a shared infrastructure project to agree on who owns the infrastructure and who is responsible for running and maintaining it. There are different ownership options, including:

• joint ownership, where two or more parties co-own the infrastructure and share rights and responsibilities;
• public-private ownership through PPPs; or
• single-party ownership, where one company owns the infrastructure and allows others to use it under a formal agreement.

In addition to ownership, the relevant contract should also clearly state which party will operate the infrastructure on a day-to-day basis and which party will handle maintenance and repairs. In practice, such responsibilities are usually provided in an Operations and Maintenance (O&M) Agreement, which helps ensure the infrastructure is safe and properly maintained over its lifespan.

3. Tariff and cost recovery mechanisms

For shared infrastructure to be sustainable, it must generate enough income to cover its construction, operation, and maintenance costs. This means the fees or tariffs charged to users must be fair, transparent, and sufficient to keep the infrastructure running smoothly. As such, the relevant contract should clearly stipulate:

• how tariffs are calculated;
• how and when users must make payments, including billing cycles, payment deadlines, and penalties for late payments; and
• how future costs will be shared, especially when major repairs, expansions, or upgrades are needed.

4. Land use and environmental compliance 

Shared infrastructure in mining corridors affect multiple communities and landowners within the relevant project footprint. As such, it is essential for all parties involved to carefully manage land access, environmental obligations, and community engagement. The key considerations under this aspect include:

• confirming ownership of the land, and obtaining the necessary permissions or titles;
• ensuring fair and timely compensation to individuals or communities displaced, or affected by the project footprint, in line with the Land Act;
• securing approvals through Environmental Impact Assessments (EIAs) undertaken by the National Environmental Management Council (NEMC), as required under the EMA; and
• community engagement through consultations with local communities, addressing concerns, and establishing grievance mechanisms to maintain social acceptance.

5. Dispute Resolution

Infrastructure sharing increases the potential for disputes which could relate to access rights, payment terms and maintenance responsibilities, among others. Therefore, it is advisable for the relevant contract to incorporate dispute resolution clauses, including negotiation, mediation, and arbitration mechanisms.

Conclusion

As Tanzania pursues industrialisation and value addition in the mining sector, the importance of integrated, shared infrastructure cannot be overstated. By aligning contractual frameworks with regulatory requirements, stakeholders can unlock the full potential of Tanzania’s mineral corridors for inclusive and sustainable growth.