African Barrick Gold, the London-listed miner, saw its shares hit by fears the Tanzanian government is angling for higher royalties, even as the company reported record profits. Everyone wants a slice of the pie when the gold price soars Photo: Reuters By Emma Rowley 12:49PM BST 20 Oct 2011 The shares fell 6.2pc, closing down 35p at 529p, after it emerged that the Tanzanian government wants the company to agree to raise the royalties it pays on revenues from 3pc to 4pc, to fall in line with new legislation. The move illustrates the increasing jostling between miners and governments over how to share the returns from the high prices fetched by gold and other commodities. Existing gold miners in the east African country have legally binding agreements in place meaning that such a move would have to be voluntary, said Greg Hawkins, the company's chief executive. "[Our rates] haven't changed," he said. "Having said that, the government is certainly keen for us to move to the new rate. We, as an industry, have been in discussions with them. "We are looking at it [from the point of view] that we are there for the longer term … they are looking at it from a point of view of getting a balance in terms of funds into the government coffers." He sounded optimistic that African Barrick would not have to pay the higher rate until its current agreements expire, because of the risk arbitrary government action poses to companies' investing. "It's a pretty good relationship, he said. Nonetheless, the developments unsettled investors, despite the company revealing it is sitting on a massive $525m (£333m) cash pile, after its gold hit a record average price of $1,774 an ounce in the third quarter of the year, up 44pc. The world's demand for gold, seen as a safe haven amid falling equity markets, helped pre-tax profits reach $148.7m for the three months to the end of September, against $60.9m for the same period a year earlier. Net profit was a record at $102m. African Barrick warned that in addition to government moves to increase their slice of the pie, labour costs are going up as the industry's relatively small pool of workers sees the scale of companies' returns and also find themselves more in demand. "The reality is you can't enjoy every dollar of the gold price increase but we are currently capturing the vast majority of that in the margin," said Mr Hawkins.