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Dar to benefit from transparency push on global mineral revenues

Discussion in 'Jukwaa la Siasa' started by nngu007, Jan 8, 2012.

  1. nngu007

    nngu007 JF-Expert Member

    #1
    Jan 8, 2012
    Joined: Aug 2, 2010
    Messages: 15,874
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    [TD]30th December, 2011[​IMG]

    Tanzanians expect an end to corruption and embezzlement of revenues from minerals, oil and gas as increased push for adoption of rules that force multinational companies to report, publically, what they pay to mineral rich countries like Tanzania, gain momentum, especially on Australia and Canada.

    Such pressure comes after several global players that include the European Commission and the United States showed their intention to support full transparency in the extractive industry on different occasion.

    On September 20[SUP]th[/SUP] 2011 the US President, Barrack Obama, while launching the Open Government Partnership announced his country's intention to implement the Extractive Industry Transparency Initiative (EITI) in the near future.President Obama said: "We're continuing our leadership of the global effort against corruption, by building on legislation that now requires oil, gas, and mining companies to disclose payments that foreign governments demand of them. Today, I can announce that the United States will join the global initiative in which these industries, governments and civil society, all work together for greater transparency so that taxpayers receive every dollar they're due from the extraction of natural resources."

    Again on October 25[SUP]th[/SUP] this year (2011), the European Commission proposed rules which, if accepted by the Council of Ministers and the European Parliament will impose strict rules on all European listed and non-listed large scale oil, gas, mineral and logging companies to disclose their revenue payment on country by country, project by project basis.


    Tanzania as a resource rich country with massive gold and diamond reserve which have been exploited even before independence and several tones of Tanzanite, a gem only found in Tanzania, have continued to wallow in utter poverty with extreme violation of human and environmental rights being an order of the day around large scale mines.


    For instance, impeccable sources have it that, Tanzania has received over 2.5 billion US dollars in Foreign Direct Investment in the extractive sector from 1998 and has exported mineral averaging 567.3 million US dollars from 2002 to 2007.


    Yet according to the 2002 statistics 36 percent of its population live below the poverty line since the sector has very low contribution to the country's economy.

    [TABLE]
    [TR]
    [TD]MINERAL[/TD]
    [TD]QUANTITY[/TD]
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    [TR]
    [TD="width: 35%"]Natural Gas[/TD]
    [TD="width: 64%"]7.72 Trillion Cubic Feet[/TD]
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    [TD="width: 35%"]Gold[/TD]
    [TD="width: 64%"]2,222 tons[/TD]
    [/TR]
    [TR]
    [TD="width: 35%"]Diamond[/TD]
    [TD="width: 64%"]50.9 Million carats[/TD]
    [/TR]
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    [TD="width: 35%"]Tanzanite[/TD]
    [TD="width: 64%"]12.6 tons[/TD]
    [/TR]
    [TR]
    [TD="width: 35%"]Copper[/TD]
    [TD="width: 64%"]13.65 million tons[/TD]
    [/TR]
    [TR]
    [TD="width: 35%"]Nickel[/TD]
    [TD="width: 64%"]209 million tons[/TD]
    [/TR]
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    [TD="width: 35%"]Coal[/TD]
    [TD="width: 64%"]911 million tones[/TD]
    [/TR]
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    [TD="width: 35%"]Uranium[/TD]
    [TD="width: 64%"]35.9 million pounds[/TD]
    [/TR]
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    [TD="width: 35%"]Iron Ore[/TD]
    [TD="width: 64%"]103 million tones[/TD]
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    [TD="width: 35%"]Limestone[/TD]
    [TD="width: 64%"]303 million tones[/TD]
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    Table 1 Mineral resource potential of Tanzania as reported by the Geological Survey of Tanzania in 2007
    As manifested by the table above, one can never escape associating the varsity mineral reserve and the low income accruing from it with stinking corruption within the country's extractive authorities and institutions.

    As already noted by the 2008 Bomani Presidential Mining Review Committee report and other preceding reports, the sector is poorly regulated with venues of systemic corruption propelled by huge discretionary ministerial powers and numerous unnecessary tax reliefs, exemptions and loopholes.


    The feeling of the general public is that confidential Mining Development Agreements signed between the government and large scale foreign companies were in most cases entered into under questionable circumstances possibly lubricated by corruption.


    A good example is the 25 year Mining Development Agreement that was signed at Churchill Hotel in London between Barrick Gold and the former Minister of Energy and Minerals, Mr Nazir Karamagi on February 17[SUP]th[/SUP] 2007.


    The contract encountered outright public and parliamentary rejection because it had unrealistic low annual revenues (excluding royalty) of 700m/- (583,980 US dollars) compared to the 250,000 Ounces of gold the mine will be producing annually.


    And secondly, the signing of the contract in a hotel room had ended up carrying all the tell-tale signs that the former minister had been bribed.


    Unfortunately, Tanzania's sad story on extractive sectors does not only end at the contract signing stage, far from it. The fact of the matter is that revenue collection and utilization from the sector is also highly wanting.


    For instance, it is only recently that the first Tanzanian EITI report manifested a gaping hole of 36m US dollars (Inclusive of PAYE and NSSF) from revenues collected from July 1[SUP]st[/SUP] 2008 to June 30[SUP]th[/SUP] 2009 missing in government coffers.


    Therefore any effort aimed at ending secret deals in the extractive industry between governments and multinational companies is highly welcome, especially in Tanzania, a host of more than 23 large scale mining development companies from over 10 European countries as captured by the table below.

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    [TD]Company Name[/TD]
    [TD]Country of origin[/TD]
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    [TD="width: 58%"]Antrim Resources[/TD]
    [TD="width: 42%"]Canada[/TD]
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    [TD="width: 58%"]Artumas Group[/TD]
    [TD="width: 42%"]Canada[/TD]
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    [TD="width: 58%"]Dominion Oil And Gas[/TD]
    [TD="width: 42%"]UK[/TD]
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    [TD="width: 58%"]Dodsal Resources[/TD]
    [TD="width: 42%"]UAE[/TD]
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    [TD="width: 58%"]Key Petroleum[/TD]
    [TD="width: 42%"]Australia[/TD]
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    [TD="width: 58%"]Mauriel ET Prom[/TD]
    [TD="width: 42%"]France[/TD]
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    [TD="width: 58%"]Ndovu Resources/Tullow Oli[/TD]
    [TD="width: 42%"]Australia[/TD]
    [/TR]
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    [TD="width: 58%"]Ophir Energy[/TD]
    [TD="width: 42%"]Australia[/TD]
    [/TR]
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    [TD="width: 58%"]Pan African Energy[/TD]
    [TD="width: 42%"]UK[/TD]
    [/TR]
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    [TD="width: 58%"]Petrobras[/TD]
    [TD="width: 42%"]Brazil[/TD]
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    [TD="width: 58%"]Petrodel Resources/Heritage[/TD]
    [TD="width: 42%"]UK[/TD]
    [/TR]
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    [TD="width: 58%"]RAK-GAS Company[/TD]
    [TD="width: 42%"]UAE[/TD]
    [/TR]
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    [TD="width: 58%"]SHELL International[/TD]
    [TD="width: 42%"]Holland[/TD]
    [/TR]
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    [TD="width: 58%"]STATOILHYDRO ASA[/TD]
    [TD="width: 42%"]Norway[/TD]
    [/TR]
    [TR]
    [TD="width: 58%"]HYDROTANZ[/TD]
    [TD="width: 42%"]UK[/TD]
    [/TR]
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    [TD="width: 58%"]TULLOW OIL[/TD]
    [TD="width: 42%"]UK[/TD]
    [/TR]
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    [TD="width: 58%"]Beach Petroleum[/TD]
    [TD="width: 42%"]Australia[/TD]
    [/TR]
    [TR]
    [TD="width: 58%"]African Barrick Gold[/TD]
    [TD="width: 42%"]Canada[/TD]
    [/TR]
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    [TD="width: 58%"]Resolute Mining[/TD]
    [TD="width: 42%"]Australia[/TD]
    [/TR]
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    [TD="width: 58%"]Petra Diamond[/TD]
    [TD="width: 42%"]South Africa[/TD]
    [/TR]
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    [TD="width: 58%"]Mantra Resources & ARMZ[/TD]
    [TD="width: 42%"]Australia and Russia[/TD]
    [/TR]
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    [TD="width: 58%"]Tanzania One[/TD]
    [TD="width: 42%"]South Africa[/TD]
    [/TR]
    [TR]
    [TD="width: 58%"]Anglogold Ashanti[/TD]
    [TD="width: 42%"]South Africa/UK[/TD]
    [/TR]
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    [TD="width: 58%"]Tanzania Royalty Corporation[/TD]
    [TD="width: 42%"]Canada[/TD]
    [/TR]
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    Table 2 Mining, Oil and Gas companies working in Tanzania and their countries of origin
    If Canada, which is already implementing Open Government Partnership starts implementing its EITI work plan by March 2012, Tanzania will stand to benefit as it presently hosts four active mineral development companies from Canada.

    Likewise Australia which has been shelving a plan to undertake a pilot of the EITI for several months will be another strategic nation to Tanzania if it implements EITI as Tanzania hosts six well established mining development companies from Australia.


    In fact, Australia's dilly dallying in implementing its EITI is a clear sign that it is not doing what it has been preaching to the world, namely a model and a staunch pioneer of transparency and accountability to developing countries.


    It is therefore a shame to its image globally as almost all its neighboring countries that include Timor Liste, Indonesia and the Solomon Islands are implementing EITI.


    Norway which has at least one company operating in Tanzania was the first OECD country to implement EITI.


    And when all is said and done, Tanzanians are waiting to see how the US's Dodd Frank Act that requires all extractive companies listed in US stock exchanges to report on what they pay as revenues to host countries such as Tanzania which hosts the Tanzania Royalty Exploration which has been registered in the Toronto and New York Stock Exchanges.


    Recently, the Tanzania Royalty Corporation-TRE signed a 55 percent share deal with the Tanzanian government to redevelop the Buckreef Gold Mine which is worthy 280m US dollars. However, it has come to light that the company which is headed by James Sinclair who is said to be a close friend to President Kikwete, does not have the requisite financial muscle as it has a cash capital of only 30m US dollars.


    The deal was also questioned further when it was discovered that TRE had paid a mere 3m US dollars to secure a controlling stake of the Buckreef Gold Mine.

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  2. nngu007

    nngu007 JF-Expert Member

    #2
    Jan 8, 2012
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    I believe the transparency will help our nation to fight damn corruption to get ride of officials with personal interests
     
  3. BAK

    BAK JF-Expert Member

    #3
    Jan 8, 2012
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    ....Thanks a lot Mkuu for this useful post, but with this corrupt government in power, I doubt if we'll be able to see any positive developments in the near future.
     
  4. Zinedine

    Zinedine JF-Expert Member

    #4
    Jan 8, 2012
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    Yes, well said! Non-positive results will be seen frm this initiative-simply b'cause whites are always not friends of us when it comes to economic independent for africans. They are highly benefiting from our resources so neither of these moves will solve our problems. I thnk it z high time now we,tanzania should demand alternative measures of benefiting from our wealth resources, and one of the probably measure is to substitute cash for human capital development of our pple. This should work by equating a given number of students that should be graduated frm dif vasity around the world per unit of particular resources. This then wil enable us to transform our economy from mineral based economy to human capital development economy,especially when our mines become dried.That generation wil even able to use their knowledge to explore renewable resources Tanzania endowed with to satisfy their demands.
     
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