Mineral Offtake and Agency Agreements: Clauses That Survive Scrutiny

This page is the mineral offtake and agency operating file: which terms in a purchase, marketing or agency contract over Tanzanian minerals hold when the Commission and TRA read them. It is not a precedent you can sign, and not a replacement for the advocate settling it.

• Licence class before stock: mineral dealer licence
• Where lawful purchase happens: markets and buying centres
• Royalty, inspection, export gate: export controls
• Title before tonnage: overlapping claims on the cadastre

As at 14 September 2026. This file rests on Cap. 123 together with the two natural-resource statutes of 2017; the Mining Commission publishes live forms, the register and the fee schedule at tumemadini.go.tz.

What a signature cannot buy

The Mining Commission grants mineral rights, licenses dealers and brokers, runs the mineral markets and the Government Mineral Warehouse, and approves any dealing in a mineral right. A contract allocates money and tonnage between buyer and holder. It creates no licence and moves nothing the Commission has not approved in writing.

Two classes are closed to foreign capital before drafting starts. A primary mining licence is reserved to Tanzanian citizens and bodies corporate wholly composed of them; the broker’s class sits on the same side, and GN No. 487A of 2025 carries the reserved-activity list. Funding a citizen’s primary licence and taking all its output reads as control of a reserved right.

Cap. 123 governs Mainland Tanzania alone, minerals being a non-Union matter. Material from Unguja or Pemba sits under Zanzibar’s own legislation and revenue desk; a Mainland dealer’s licence does not travel.

Tanzanian law, Tanzanian forum

The Permanent Sovereignty Act, 2017 (Act No. 5 of 2017) vests mineral wealth in the people and, at section 11, sends disputes over such arrangements to judicial bodies established in Tanzania, applying domestic law. English law with a London seat is the commonest import in a foreign buyer’s precedent, and the first thing an advocate strikes. Arbitration stays open, seated here, under the Arbitration Act, 2020. Section 6 keeps earnings from the disposal of natural wealth in a bank established here.

Its companion, the Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Act, 2017, lets Parliament reopen terms called unconscionable at section 6 (a foreign forum, restraints on the State’s power to regulate, preferential treatment) in Government arrangements, which sets the drafting temperature downstream.

Royalty runs on gross value, not on net smelter return

Section 87 charges royalty on gross value, the classes set by the First Schedule: 6% for metallic minerals including gold, copper, silver and platinum group metals, 6% for diamonds and gemstones, 5% for uranium. A separate inspection fee of 1% is taken at clearance. Finance Acts have moved rows since 2017; read the live Schedule before fixing a pricing annexe.

Imported precedents price on net smelter return: metal value less treatment and refining charges, penalty elements and assay deductions. That base is not accepted. Royalty attaches at the valuation point, and the smelter’s deductions belong below the royalty line. A charge defined as a percentage of NSR produces an assessed shortfall plus interest at reconciliation.

Liability sits with the holder of the mineral right. Making the buyer responsible allocates cost between the parties; the statutory debt does not move.

Prior claims that rank ahead of the buyer

Where a special mining licence is involved, section 10 of Cap. 123, inserted by the Written Laws (Miscellaneous Amendments) Act No. 7 of 2017, gives the Government non-dilutable free carried interest of not less than 16%: a shareholder at the table before terms are discussed.

The second is newer. The Finance Act 2024 required holders of mining, dealer’s, smelting and refining licences to set aside a share of the gold they produce or trade for sale to the Bank of Tanzania; regulations made that year put the share at not less than 20%. Verify the Government Notice in force before exclusivity is drafted. Workable drafting carves the statutory quantity out of the exclusive tonnage, prices it on the Bank’s terms, and schedules the balance.

Clause against instrument

An agency is a mandate, not a licence

Agency sits in Part X of the Law of Contract Act Cap. 345: acts done inside authority bind the principal. Nothing there supplies a permission. Buying minerals for resale needs a dealer’s licence in the buyer’s own name; purchasing at a licensed market needs the class the Commission issued to that person.

The structure that fails is familiar. A foreign buyer appoints a Tanzanian agent, funds a float, and the agent buys in its own name. Holding no licence of the right class, the agent deals unlawfully. Holding one, it has sold to the principal rather than bought for it, at a related-party price TRA will test.

Confined to lawful agent work (introducing sellers, coordinating assay and haulage, presenting documents at the Warehouse, taking a commission) the agreement earns its place. It cannot enlarge rights beyond the licences the principal holds.

Local content, banking and what is withheld

The Mining (Local Content) Regulations, 2018 (GN No. 3 of 2018, as amended) reach any company supplying goods or services to the industry. A non-indigenous supplier forms a joint venture with an indigenous Tanzanian company and gives it equity of not less than 20%. Indigenous means incorporated under the Companies Act Cap. 212 with at least 51% of shares held by citizens. Insurance goes through a TIRA-registered broker, legal work through a Tanzanian firm, banking through a bank incorporated here, and sale receipts land in that same local account. The Foreign Exchange Act Cap. 271 and Bank of Tanzania circulars govern movement out again; settlement instructions naming an offshore account fail at the bank, not in the negotiation.

Commission to a non-resident agent is a service fee. Section 83 of the Income Tax Act Cap. 332 sets withholding at 15% for non-residents and 5% for residents; the source rule for service payments by a resident has been amended more than once, so read the current wording on tra.go.tz. VAT under Cap. 148 stands at 18%: exported goods are zero-rated, but an agency fee earned on minerals assayed, warehoused and cleared here is regularly standard-rated. Corporate income tax is 30%, and service levy of 0.3% of turnover falls due under the Local Government Finance Act Cap. 290.

The order the desks actually take

1. Pull the cadastre entry: class, registered holder, area, status, expiry, before any term sheet.
2. Test the trade against the reserved list, then fix who holds which permission in whose name.
3. Settle governing law and forum on a Tanzanian basis, any arbitration seated locally.
4. Fix pricing on statutory gross value, treatment charges and assay deductions below the royalty line.
5. Take written Commission approval for any assignment, charge, option or change of control.
6. File the local-content plan and constitute the joint venture; place insurance, banking and legal work accordingly.
7. Open the TRA file: withholding registration, VAT treatment of the fee, transfer-pricing documentation, stamp duty under the Stamp Duty Act Cap. 189.
8. Route the first consignment through the market or Warehouse for valuation, pay royalty and inspection fee, then draw the export permit.

Documents the file needs

Certified copy of the mineral right with a register extract. Certificate of incorporation, BRELA extract and beneficial-ownership particulars for both parties. TIN and VAT certificates with a current tax clearance. The dealer’s, broker’s, smelting or refining licence for the trading leg. The local-content plan and the joint-venture agreement showing indigenous equity.

Board resolutions authorising execution, and written approval where the contract touches the right. Cover notes from a TIRA-registered broker. Per shipment: valuation report, royalty and inspection-fee receipts, export permit, assay certificates, airway bill. A stamped counterpart closes the file.

Illustrative arithmetic on a doré consignment

Illustrative arithmetic, not a quotation. A gold doré lot is valued at the Warehouse at USD 2,000,000: TZS 5,200,000,000 at an illustrative TZS 2,600 to the dollar. Royalty at 6% is TZS 312,000,000. Inspection fee at 1% is TZS 52,000,000. Service levy at 0.3% is TZS 15,600,000. A marketing commission of 2.5% on gross is TZS 130,000,000, from which 15% withholding of TZS 19,500,000 is deducted, leaving TZS 110,500,000 remitted. The seller retains TZS 4,690,400,000 before cost of sales and corporate tax.

Now add the clause a foreign agent usually asks for: commission payable free of Tanzanian deductions. To deliver TZS 130,000,000 net, the invoice grosses up to TZS 152,941,176, carrying withholding of TZS 22,941,176. Four words in a fee schedule add 17.6% to the cost of the same service.

Where these agreements stall

• A term sheet signed with someone who is not the registered holder on the cadastre.
• Exclusivity over all production, granted after the set-aside took effect, with no carve-out.
• A charge or option over the licence taken without approval, leaving the lender unsecured at enforcement.
• An agent holding client cash and buying in its own name: an unlicensed purchase.
• Commission remitted gross for three years, surfacing as withholding, interest and penalty at audit.
• Zanzibar-origin material treated as Mainland stock, its papers presented to an island desk.

Mandate-holders this file does not replace

The Commission owns licensing, dealings in mineral rights, the markets, valuation and export permits; the Ministry of Minerals owns policy and the Government Notices. TRA owns income tax, VAT, withholding, transfer pricing, stamp duty and customs; the Bank of Tanzania, foreign exchange and the gold purchase programme. BRELA owns incorporation and beneficial ownership; TIRA insurers and brokers; NEMC the environmental certificate.

Two more sit close. Dealers in precious metals and stones are reporting persons under the Anti-Money Laundering Act Cap. 423, carrying due-diligence and reporting duties. The Fair Competition Commission reads long exclusive dealing and change of control under the Fair Competition Act, 2003. An advocate settles the instrument; Zatra prepares, structures and coordinates the file around it.

What to confirm before you act

• Licence class, registered holder and expiry on the Commission’s register, on the day of signature.
• The live First Schedule row for the actual mineral, and the current inspection-fee rate.
• The set-aside percentage and Government Notice in force, against the exclusivity granted.
• Whether the counterparty’s activity touches GN No. 487A of 2025 or a citizen-only class.
• The withholding rate and current source rule for the fee, on tra.go.tz.
• Whether the contract touches the mineral right, and so needs approval before execution.