Canadian investor offers surprise backing to Tanzania's mining law | JamiiForums | The Home of Great Thinkers

Dismiss Notice
You are browsing this site as a guest. It takes 2 minutes to CREATE AN ACCOUNT and less than 1 minute to LOGIN

Canadian investor offers surprise backing to Tanzania's mining law

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Geza Ulole, May 4, 2010.

  1. Geza Ulole

    Geza Ulole JF-Expert Member

    May 4, 2010
    Joined: Oct 31, 2009
    Messages: 11,090
    Likes Received: 4,036
    Trophy Points: 280
    3rd May 10
    Canadian investor offers surprise backing to Tanzania's mining law

    ThisDay Reporter
    TANZANIA's new mining Act has received backing from an unexpected quarter, following the decision of the Chairman and Chief Executive Officer of Tanzanian Royalty Exploration Corporation, James Sinclair, to throw his weight behind the controversial legislation.

    Sinclair, one of the world's famous gold speculators and holder of over 140 mining licences in Tanzania, said in a statement last week that the new Tanzanian Mining Act would level the playing field with other African jurisdictions.

    "The new mining act is intended to alleviate public concerns that the minerals sector in Tanzania is not contributing enough to the national economy, an issue that has surfaced in developing countries around the world," he said.

    Sinclair noted that the Mining Act 2010 appears to bring Tanzania's royalty rates for minerals production more in line with other African mining nations.

    Among the highlights of the new mining legislation is the adoption of a gross revenue form of royalty that will see royalty rates increase from 3 percent to 4 percent for gold and other precious and base metals.

    There will also be a flat 7 percent rate applied to uranium production and a standard 3 percent rate for other minerals.

    In addition, the new law requires the government to own a stake in future mining projects based on the level of investment in each individual joint venture.

    The legislation further requires mining companies to list on the Dar es Salaam Stock Exchange which Tanzanian Royalty said it was already preparing to do.

    The Tanzanian government examined various forms of royalties used in other mining jurisdictions and concluded the gross royalty route was the least complicated from an administration standpoint

    "Adopting gross revenue form of royalty simplifies royalty calculation since it is based on few documents, and it is computed once at the point of export within the country. This form of royalty also eliminates disputes between the Government and mine operators resulting from royalty reconciliation," the Tanzania Minerals Audit Agency said in a discussion report prepared before the new legislation was passed.

    The agency noted that despite changes to fiscal regimes for the mining industry in Zambia, Ghana, and South Africa, (the latter two countries being the African continent's largest gold producers) investor confidence in those countries remained strong after the changes were implemented. In Ghana, royalties vary from 3-6% of the gross value of minerals produced.

    The new mining legislation also seeks to make it mandatory for the government to set aside specific areas for small-scale miners as a means of averting conflicts between artisanal miners and larger mining companies.

    "Our company has been a trend setter in this particular area and in fact we have already entered into partnership arrangements with artisanal miners which have provided mutual benefits to both parties," said Sinclair.

    "The new legislation will provide the impetus for Tanzanian Royalty and other companies to contribute in a meaningful way to Tanzanian society while developing the nation's vast resource potential in a responsible manner."

    Sinclair's stance is in stark contrast to the position of the Tanzania Chamber of Minerals and Energy, which rejected the new mining law, saying it would further erode investor confidence.

    In a joint statement issued last week through the chamber, mining companies described the legislation as 'distorted,' saying it would curtail future mining projects in the country.

    '(The bill) ... will only serve to hinder further growth of the mining sector as existing investors resort to curtailing existing and expansion projects and is bound to scare potential investors who will look elsewhere to invest,' said the chamber.

    The Tanzania Chamber of Minerals and Energy represents the interests of international and local investors in the sector.

    They include African Barrick Gold, which has four gold mines in Tanzania, Australia's third largest gold miner, Resolute Mining and South Africa's Anglogold Ashanti, which also have gold operations here.

    The Deputy Minister for Energy and Minerals, Adam Kighoma Ali Malima, said the new legislation was aimed at ensuring Tanzanians benefited from the mining sector.

    "This law was not enacted simply with the aim of pleasing investors ... it was passed by parliament last week with the goal of safeguarding the interests of Tanzanians in the country's mining activities," he told Reuters by phone.

    He said the chamber had been involved in the dialogue about the new law for more than a year before it was passed.

    "I consider statements by the chamber of minerals that the new mining law is distorted are outright irresponsible. The problem is you can't have everything, they are almost behaving like a spoilt child," he said.