Royalties on gold seen going up by December

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BAK

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Feb 11, 2007
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Royalties on gold seen going up by December

By Special Reporter

20th October 2011

Minerals and Energy Minister William Ngeleja

The government is planning raise royalty payments on exports of gold by the end of this year as it seeks to restructure the mining sector, Minerals and Energy Minister William Ngeleja said yesterday.
Africa’s fourth-largest gold producer has been undertaking major reforms of its mining sector following growing criticism over the industry’s relatively minor contribution to economic growth.
Tanzania’s annual gold exports have tripled to $1.5 billion in the past five years as gold prices have risen, but government revenues have remained at around $100 million a year.

“We have already basically reached agreement with mining companies on raising royalty payments ... we expect migration to the new rates to start this year in 2011,” Ngeleja told a news conference at a mining and energy conference, adding: “The Ministry of Finance and the Tanzania Revenue Authority (TRA) are finalising the procedures for that.”
The government initially planned to conclude negotiations with mining companies last month on the new royalty payments, and drafted a mining policy in 2009 as part of efforts to restructure the sector.
The 2010 Mining Act increased the rate of royalty paid on minerals such as gold from 3 per cent to 4 per cent :(:( and required the government to own a stake in future mining projects. (IMO...The Govt should also own a stake (51%) in existing projects)
Ngeleja said some mining companies had already started to pay more taxes after the government introduced

SOURCE: THE GUARDIAN
 
From MUGINI JACOB in Tarime, 27th October 2011 @ 13:00,

AFRICA Barrick Gold (ABG) has no 'social' licence to operate North Mara Gold Mine, Energy and Minerals Parliamentary Committee Chairman, January Makamba declared here on Wednesday citing endless conflicts between the Canadian investor and surrounding communities.

"You are not liked here. You may have a legal licence to operate this mine but you don't have a social licence to operate it," Mr Makamba told the North Mara Gold Mine's top management shortly after meeting local leaders and artisanal miners from the villages located near the mine.

He challenged the mine to find lasting solutions on issues that have contributed to worsen its relationship with the surrounding villagers.

This was the first time for the Energy and Minerals Parliamentary Committee members to visit the troubled mine after the 2010 general elections.

North Mara Mine General Manager, Mr Basie Maree, said various initiatives were now put in place to improve relationship between the mine and surrounding villages.

"For example, we have spent 350,000 US dollars (Mhhhh!) to upgrade a hospital here and we have donated an anaesthetic machine to the regional hospital.

"We are doing a lot of things not because we have to do but because we want to and the villagers have welcomed the new initiatives," the GM told the visiting parliamentary committee.

Local leaders and villagers have hailed Mr Maree, saying that he is the first general manager to show commitment to end conflicts between them and the mining company.

The parliamentary committee also expressed disappointment by absence of ABG senior staff from Dar es Salaam to respond to some of their questions during their visit at the mine which is located in the Northern Tarime District, Mara Region.

"We are very disappointed by the absence of senior management of ABG. We are not happy and we are going to take this matter to parliament," Mr Makamba said.

Bukene MP, Mr Selemani Zedi echoed the same sentiments, saying that they expected to meet high ranking officials from ABG to give them clarifications on issues like corporate tax.

The North Mara General Manager apologized and told the lawmakers that absence of ABG senior management team from Dar es salaam was not deliberate.

"We apologize for not having Deo Mwanyika and other key people here," the GM said. Deo Mwanyika serves as ABG Vice-President.

ABG is the leading Tanzanian gold producer at the moment and it operates three other gold mines in Buzwagi, Bulyhanhulu and Tulawaka.
 
Saturday October 29, 2011
Columnist
Daily News
Anglo Gold Ashanti tax commitment about good news

By Alfred Ngotezi, 29th October 2011 @ 12:00

At long last, Anglo Gold Ashanti Mines of Geita have agreed to pay government taxes. To start with, they will pay$50 million which is equivalent to Tshs. 86 trillion in our free tumbling currency.

Announcing the good news recently in Australia, the Chief Executive Officer of Ashanti Gold Mine, Mr Mark Cutifani, assured President Jakaya Kikwete that the total sum would be paid by the end of this year.

This is good news because the sprinkle of the green bucks will assist to water our desiccated coffers. As the Shilling sank to an all time low of past 1,700/- to a dollar last week, economists asserted that the real solution for the problem lies in tilting the existing balance of trade which has become chronically unfavourable.

In real terms our economic ailments call for increased infusion of hard currency. However, not every dollar will do the trick here. Illegal dollars, for example, cannot help us much. Even reliance on external grants and aid may not pull us out of the present quagmire. What we need are real bucks obtained from increased exports and what economists call Foreign Direct Investments (FDI).

As mentioned earlier, Ashanti Gold Mine's positive gesture belongs to the FDI window, which is just a timely shot in the arm. Yet it is one thing for Ashanti to pay the said taxes but it is quite another one, whether they are paying a win-win amount. For, a tax rate that was set up a decade ago, for example, is good for nothing today. The rates will be so low that they won't bring real respite to the nation's ailing economy. In short, they are misplaced and not realistic.

There may be several variations of gold, but ultimately, the bullion is the universal measurement of the value of money. Thus, the more gold deposits a country has, the richer it becomes. Surely, Tanzania may not be endowed with so much gold, as yet, because there are open chances of starting even more mines in the days ahead. But the big question is, are we getting a fair deal for what is currently being ‘harvested'?

I suppose not. That is not my view, though; it is a documented public opinion. A quick scan of the country's media will prove just that. Still, the Bomani Team on Mining Contracts confirmed these worries.

For that reason, the Bomani Team recommended, among others, to set taxes according to the variations of the bullion's prices. For example, when the obtaining tax rates were promulgated several years back, an ounce of gold went for a few hundred dollars. But today the same is sold for $ 1,600!

In essence this is unfair, because investors will reap maximum benefits at the chagrin of the indigenous people, defeating for them, the maxim of more gold deposits more wealth. I have a problem coining a proper terminology for this other than ‘day-light robbery,' which cannot be left to go on unchecked.

My presumption is that Ashanti will pay their owing taxes in this manner. Otherwise, the dues will be too small and time-barred to be of any consequence. This is not a suggestion that Ashanti are responsible for not coughing up the right taxes. Far from it. Regrettably, government has yet to translate the recommendations of the Bomani Team to revise the existing mining laws. As for the legality of such proposed amendments, top legal experts have recommended them asserting that they are not unprecedented.

By and large, however, we ought to commend Ashanti for coming this far. It means they are committed Tanzanian tax payers. The onus for real change in the mining sector rests with the government, on the one hand, and the other biggies in the gold sector like the African Barrick Group (ABG), on the other.

I know gold mining is not as simple as peddling merchandise by the road. It sinks down huge capital that must be recouped before taxes become obligatory. True, it takes several years to recover capital injected, but that is not the end of the world. Sooner or later, as Ashanti have just shown, investors have to pay taxes. It is ‘armed robbery' to try to hide behind settlement of the 4 per cent loyalty and the non-legally binding provision of socially responsible ‘philanthropies'. Thus, mining companies, especially in the gold sector must pay taxes which are currently set at 30 per cent of their incomes. Thumbs up, Ashanti!

ngotezialfred@hotmail.com
ngotezialfred@yahoo.com
 
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