AngloGold initiates arbitration proceedings over new Tanzania legislation
13th July 2017 BY: ILAN SOLOMONS
CREAMER MEDIA STAFF WRITER
OHANNESBURG (miningweekly.com) –
Concerned about newly enacted legislation in Tanzania, gold mining major AngloGold Ashanti is seeking a “constructive dialogue” with the Tanzania government to gain assurance that its operations will not be affected by newly enacted legal and fiscal changes to the country’s mining legal regime.
AngloGold noted on Thursday that its indirect subsidiaries, Samax Resources and Geita Gold Mining were parties to a Mine Development Agreement (MDA) in relation to the development and operation of the Geita gold mine, in Tanzania, which governs the relationship between the subsidiaries and the Tanzania government in relation to Geita mine.
The company said it had “no choice” but to take the precautionary step of safeguarding its interests under the MDA by commencing arbitration proceedings under the rules of the United Nations Commission on International Trade Law, as clearly provided for in the MDA.
The gold producer stated that the MDA was instrumental in the decision to make the significant investment in the development of Geita – at a time of significantly lower gold prices – when Tanzania was an untested jurisdiction for new mine development.
AngloGold Ashanti pointed out that, since starting production almost two decades ago, Geita had been a source of “significant benefit” to all stakeholders, yielding more than $1-billion in monetary benefit to the Tanzania government.
“[In 2016] alone, a total of $130-million in taxes was paid by Geita mine,” the company highlighted.
AngloGold further noted that the three pieces of new legislation in question purported to make a number of changes to the operating environment for Tanzania’s extractive industries, including those in its mining and oil and gas sectors.
AngloGold Ashanti remarked that these changes included, among others, the right for the government to renegotiate existing MDAs at its discretion; the provision to the government of a nondilutable, free-carried interest of no less than 16% in all mining projects; the right for the government to acquire up to 50% of any mining asset commensurate with the value of tax benefits provided to the owner of that asset by the government; removal of the refund of input value-added tax incurred; an increase in the rate of revenue royalties from 4% to 6%; requirements for local beneficiation and procurement; and constraints on the operation of offshore bank accounts.
ABOUT GEITA
Geita employs about 3 750 people in permanent and contractor positions. The mine, which continues to operate normally, exports gold in the form of doré bars and contributed an estimated $593-million in revenue to the output of the country, as measured by the gross domestic product in 2016.
EDITED BY: Samantha Herbst CREA
13th July 2017 BY: ILAN SOLOMONS
CREAMER MEDIA STAFF WRITER
OHANNESBURG (miningweekly.com) –
Concerned about newly enacted legislation in Tanzania, gold mining major AngloGold Ashanti is seeking a “constructive dialogue” with the Tanzania government to gain assurance that its operations will not be affected by newly enacted legal and fiscal changes to the country’s mining legal regime.
AngloGold noted on Thursday that its indirect subsidiaries, Samax Resources and Geita Gold Mining were parties to a Mine Development Agreement (MDA) in relation to the development and operation of the Geita gold mine, in Tanzania, which governs the relationship between the subsidiaries and the Tanzania government in relation to Geita mine.
The company said it had “no choice” but to take the precautionary step of safeguarding its interests under the MDA by commencing arbitration proceedings under the rules of the United Nations Commission on International Trade Law, as clearly provided for in the MDA.
The gold producer stated that the MDA was instrumental in the decision to make the significant investment in the development of Geita – at a time of significantly lower gold prices – when Tanzania was an untested jurisdiction for new mine development.
AngloGold Ashanti pointed out that, since starting production almost two decades ago, Geita had been a source of “significant benefit” to all stakeholders, yielding more than $1-billion in monetary benefit to the Tanzania government.
“[In 2016] alone, a total of $130-million in taxes was paid by Geita mine,” the company highlighted.
AngloGold further noted that the three pieces of new legislation in question purported to make a number of changes to the operating environment for Tanzania’s extractive industries, including those in its mining and oil and gas sectors.
AngloGold Ashanti remarked that these changes included, among others, the right for the government to renegotiate existing MDAs at its discretion; the provision to the government of a nondilutable, free-carried interest of no less than 16% in all mining projects; the right for the government to acquire up to 50% of any mining asset commensurate with the value of tax benefits provided to the owner of that asset by the government; removal of the refund of input value-added tax incurred; an increase in the rate of revenue royalties from 4% to 6%; requirements for local beneficiation and procurement; and constraints on the operation of offshore bank accounts.
ABOUT GEITA
Geita employs about 3 750 people in permanent and contractor positions. The mine, which continues to operate normally, exports gold in the form of doré bars and contributed an estimated $593-million in revenue to the output of the country, as measured by the gross domestic product in 2016.
EDITED BY: Samantha Herbst CREA
