Tanzania mandates gold traders to allocate 20% of reserves for Central Bank purchase

Tanzania’s mining authority has mandated that all mining companies and gold traders exporting the precious metal must set aside at least 20 percent of their gold for sale to the central bank. This directive supports the Bank of Tanzania’s (BoT) initiative to diversify its foreign currency reserves.

The BoT began purchasing gold from local traders and miners in the past financial year, which ended in June, in an effort to strengthen its reserves amidst a decline in the value of the Tanzanian shilling. During this period, the central bank acquired 418 kilograms (922 lbs) of gold. For the current fiscal year, it aims to increase its reserves by purchasing 6 metric tons of gold.

The directive, issued by the Tanzania Mining Commission on Friday, will come into effect on October 1 as part of a newly established mining regulation.

Under the new rules, miners and traders will be required to deliver the allocated gold to two designated mineral refineries: Eye of Africa Ltd, located in the capital city of Dodoma, and Mwanza Precious Metals Refinery Ltd, situated in the lake city of Mwanza, northern Tanzania.

“All payments will be conducted according to the Bank of Tanzania’s arrangements,” the commission stated, without providing specific details on the pricing.

As of the end of July, Tanzania’s foreign exchange reserves stood at US$5.29 billion, sufficient to cover 4.3 months of projected imports of goods and services.