Tanzania Moves to Restructure Coal Sector to Eliminate Market Bottlenecks

Tanzania is taking decisive steps to reform its coal industry, issuing a directive for stakeholders to establish a national association aimed at addressing long-standing market bottlenecks and improving sector performance.

The move reflects a broader push by the government to strengthen oversight, enhance coordination and unlock greater economic value from the country’s mineral resources.

Government Push to Streamline the Coal Market

The directive, announced by Minerals Minister Anthony Mavunde, requires coal producers and traders to form a unified industry association within seven days. The goal is to improve communication between stakeholders and regulators while tackling inefficiencies that have weakened the sector’s competitiveness.

Authorities believe a formal association will help curb the influence of informal market players, reduce fragmentation and create a more transparent and structured coal value chain.

Addressing Structural Bottlenecks

Tanzania’s coal sector has been growing rapidly, supported by broader expansion in the mining industry. However, several operational challenges continue to limit its full potential.

Key concerns raised by industry players include rising royalties, increased port handling charges and limited involvement in pricing decisions. These factors have raised costs and reduced the competitiveness of Tanzanian coal in regional markets.

Additionally, unregulated traders have been identified as a destabilising force, contributing to price distortions and inefficiencies across the supply chain.

Export Dependence and Value Chain Gaps

Despite its resource potential, Tanzania exports more than 80% of its coal, with only a small portion used domestically.

The government is now encouraging stakeholders to explore local processing and value addition opportunities, which could increase revenue, create jobs and support industrial development.

This shift aligns with a wider continental trend of moving beyond raw commodity exports toward beneficiation and downstream processing.

Regional Competition Pressures

Tanzanian coal exporters are also facing stiff competition from regional suppliers such as South Africa and Mozambique, where production costs and logistics are often more favourable.

Industry leaders have pointed out that higher royalties and port fees in Tanzania put local producers at a disadvantage, particularly in key markets like Kenya, where buyers can easily switch suppliers depending on global price movements.

Toward a More Coordinated Mining Sector

The establishment of a coal association is expected to provide a unified platform for engagement with the government and the Mining Commission. It will also support better monitoring of the sector and faster resolution of industry challenges.

The initiative comes as Tanzania seeks to ensure its natural resources play a more central role in driving economic growth, in line with national development priorities.

A Turning Point for Tanzania’s Coal Industry

Tanzania’s latest directive signals a shift toward more structured and coordinated mining governance. By addressing bottlenecks, improving transparency and promoting value addition, the country is positioning its coal sector for more sustainable growth.

If successfully implemented, these reforms could enhance Tanzania’s competitiveness in regional energy markets while unlocking greater long-term value from its mineral wealth.