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Mining and colonial practices in Tanzania - The return of Victorian era exploitation?

by Evans RubaraAfrica Files
November 20th, 2008

http://www.pambazuka.org/en/category/comment/52093

Multinational mining activities are introducing another era of colonialism in Tanzania as they hold major decisive positions on the use of prime land areas, and profit greatly from the mining of valuable mineral resources. In the recent past, Tanzanians have raised concerns on how the multinational mining companies plunder the natural resources at the expense of the local people. Because of the prevalent high rates of this pillaging of the national stock of natural resources, the citizenry have woken with an uproar to question the government’s stance on ensuring land security for its people, and benefits from their resources.

The presidential commission appointed by President Kikwete (2007) and chaired by Judge Mark Bomani (also known as the Bomani Commission), set up to probe the accusations of ‘theft’ of natural resources and gross human rights violations, found that Tanzania does not benefit sufficiently from the multitude of natural resources in the land. The report states that, ‘Despite the presence of such a huge amount of mineral reserves, the contribution of this sector to the national economy and community development seems not to be meeting citizens’ expectations compared to other sectors of the economy.’

The Canadian company, Barrick, and the South African firm AngloGold Ashanti Barrick and Tanzania Royalty Exploration Corporation control over 50% of Tanzania’s gold projects. Barrick owns three of the seven major gold mining projects in Tanzania, while TRE controls over 60% of the mining rights in the mineral rich area of Lake Victoria.

COMPENSATION

‘The process currently used is for the mining companies to collaborate with district leadership without involving the local citizens who will be displaced. Consequently they do not know their rights and the amount of compensation they ought to eventually receive. The government evaluator is used in valuing the compensation amounts for each property without informing and involving the citizens and after the valuing exercise the people are paid through the office of the District Commissioner,’ reads part of the report.

The mining policy states that The Land Act (1999) and The Village Land Act

The Mining Act (1998), section 96 states that, ‘The license offered shall be utilized without causing any harm to the land owner or the rightful resident. Section 96(3) states that compensation for the resident should match the market value, rightful and sufficient. Under section 96(5), the Act states that in case of any dispute relating to the compensation paid under section 96(3), the complainant may submit the complaints to the Commissioner of Minerals who shall address them using his authority rendered to him under Part VIII of the Mining Act.’

Despite the compensation guidelines set out in the Land Act, 1999, it is apparent that some of the criteria are not applied during the preparation and the actual payment of compensation. ‘The citizens do not know the basic criteria for computing the compensation amounts. Basically, the real situation shows that the whole compensation process is not clear and not fair – hence, unsatisfactory. Valuing for compensation is usually done without heeding the key issues identified in the law (i.e. disturbance, transport and the value of the properties depending on where they are). Many people have been displaced without being paid the compensation or being allocated alternative places,’ states the Bomani Commission

LOBBYING

In the Bomani report, it is also evident that the Tanzanian government has been ‘manipulated’ by the mining companies to leave her citizens in the merciless hands of the mining companies. As a result, the government is slated for making bargains with the mining companies without consulting the local communities. In July 2008, THISDAY reported that the Canadian High Commissioner to Tanzania, Janet Siddall, and other officials from the embassy in Dar es Salaam were in Dodoma on an intense mission to lobby MPs about their positions on the Bomani committee report findings. Parliamentary sources confirmed that the Canadian delegation had been in private talks with influential legislators from both the ruling Chama Cha Mapinduzi (CCM) and the Opposition. ’’They were keen to ensure that Parliament does not endorse the Bomani committee report for immediate implementation, because that would have quite negative consequences for that country’s business and investment interests in Tanzania,’’ one source told THISDAY.

The report is in line to be debated in the National Assembly during the ongoing budget session, and may involve amendments to the Mining Act which will tighten operating regulations and increase revenue to the government. While the investors have been accused of ‘arm-twisting’ by the government for a deal that favours them, the government have also been blamed for giving ‘big portions of land to multinational mining companies without considering the real use of it by those who owned the place.’ All these revelations in the Bomani report reveal that the multinational companies like Barrick Gold Corporation have found weak points in the government’s policies and practice by which they plunder the country of her wealth that should be used to enrich the lives of her people.

In a recent meeting between a group of 29 journalists and Barrick Gold Corporation Bulyanhulu Mining site in Kakola village, Kahama district, the delegation was informed by the general manager, Greg Walker, that Barrick have requested the government to be lenient in enforcing some of the demands. ‘We have been in dialogue with the government on a number of the newly proposed policies on mining. There are those which are harsh to an operation like ours and we have asked them to review them if at all we are going to help Tanzania make economic advancement from mining activities,’ Walker said.

Besides this it was revealed that Barrick, as an investing company in Tanzania, owns land not being put to good use while the government is seeking appropriate land for her citizens. ‘We have been holding discussions with the government on whether the Kakola – Bulyanhulu residents should remain on the land where they are right now for a long time but until now we have not reached a consensus. Seeing what the people go through, we have decided to give them the land. Actually it is not yet theirs but we are finalising legal documents to finally hand over the land to Kakola people. This goes hand in hand with our allowing installation of electrical power lines to commence,’ said Barrick Gold Corporation’s general manager at Bulyanhulu Gold Mine site, Greg Walker.

TAXATION REVENUES

There are also the issues touching taxation in the mining sector in Tanzania. The government has been described as not benefiting enough from the multinational mining activities in the land. This is attributed to the low royalty rates and unpaid corporate taxes. The report ‘A Golden Opportunity?’ released by the Christian Council of Tanzania (CCT), the National Muslim CouncilTanzania Episcopal Conference (TEC) in collaboration with Christian Aid (UK) and Norwegian Church Aid shows that the government and its people do incur great losses of tax revenue in the extractive industry. ‘We calculate that Tanzania has lost at least $265.5m in recent years as a result of an excessively low royalty rate, government tax concessions that allow companies’ to avoid paying corporation tax and possibly even tax evasion by some companies if allegations are true.
(AGA) are the main giants in the mining industry in Tanzania. Two Canadian companies, (1999) are currently the two main acts responsible for land issues including compensation. These two laws provide a legal basis on ownership and compensation on land matters. However, there are other laws also with provisions on land acquisition for different uses including starting a mine. In Tanzania these laws are not well applied. The multinational mining companies take advantage of the locals who are ‘not enlightened about the compensation process, their rights and the responsibility of the new land owner in compensating them’. Sometimes the companies use administrative and other corrupt measures to avoid making payments. (BAKWATA) and the

This is a very conservative estimate, in that it does not cover all the gold mining companies or all figures for recent years (which are not publicly available). Neither does it cover the financial costs of other tax incentives such as VAT exemption, which are extremely difficult to estimate. These extra revenues could of course provide a huge boost to tackling poverty in Tanzania,’ reads the executive summary of the second edition of the report.

Commissioned by the three main religious bodies in Tanzania and concerning a South African company, this report states that, ‘Company figures show that AngloGold Ashanti has paid taxes and royalties totalling US$144m in 2000–07 and over the same period has sold around $1.55bn worth of gold, meaning that it has paid the equivalent of around 9 per cent of its exports in remittances to the government. Barrick, meanwhile, does not state on its website how much in taxes and royalties it pays to the Tanzanian government – our calculations show that it is paying a figure equivalent to around 13 per cent of its export sales in remittances to the government.’

On their visit to the Bulyanhulu Gold Mine site owned by Barrick Gold Corporation, the general manager, Greg Walker, told the journalists that Barrick ‘[is] not paying corporation taxes, we will only start paying corporation taxes in 2014 when we will begin realising profits.’ This is confirmed further by the report ‘A Golden Opportunity?’ which states that, ‘Few mining companies have paid corporation tax (levied at 30 per cent of profits) because they have consistently declared losses. Our analysis, drawing on AGA and Barrick company reports, shows that both companies are making gross profits in Tanzania.’ The report also pinpoints the loopholes from the government of Tanzania’s tax regime which give the investors in the extractive industry opportunities for manipulation.

‘The country’s generous tax concessions mean that they and other companies are able to avoid declaring a taxable income. The Public Accounts Committee (PAC) presented a report to parliament in February 2007 noting that mining companies declared losses of US$1.045bn between 1998 and 2005. It put the losses down to the capital expenditure allowance and weak documentation of records by the Ministry of Energy and Minerals,’ reads the report. While the investors in the mining sector declare losses all the time, in the wake of the uproar from the citizens about the rampant looting of the natural resources, the government contracted for an independent audit which found that the mining companies were fabricating their losses.

‘An independent audit conducted by Alex Stewart Assayers (ASA) in 2003, and leaked to the media in 2006, alleged that four gold mining companies, including Barrick and AGA, overstated their losses by US$502m between 1999 and 2003, indicating that the government lost revenues of US$132.5m. The audit also noted that thousands of documents were missing that would have shown whether royalties valued at US$25m were, in fact, paid.’

ENVIRONMENTAL POLLUTION

Furthermore, the mining companies have been accused by local communities of polluting the environment in the localities where they conduct operations, subsequently endangering the lives of local people. In North Mara where Barrick has a mining site, the tailings dam is freely running into the pastures and fields, and the heavily contaminated waters from the processing plant adversely affect the local people by leaking into their water sources.

‘During a meeting with village leaders from 7 Wards surrounding North Mara mine, it was reported by members of the environment committees from the respective wards that their sources of water have been polluted by the waste water coming from the mining area which leaks from the pond in the mine. This has affected the health of the people around the mining area together with their livestock and crops. Complaints have been forwarded several times to leaders but the situation remains the same,’ reads ‘Mining for Life’ a report by the Religious Leaders in Tanzania on mining issues.

Apart from the environmental degradation, the ‘Mining for Life’ report says that, ‘The technology and equipment used by the mining companies break down the environment in the mining area. We witnessed little activity for environmental conservation compared to the level of destruction that is taking place in all mining areas. We saw a very good and strong example of such destruction when the team visited Buhemba Gold Mine which is now out of production. Some questions are still lingering: How did reclamation fund help in restoring the destruction. Was it given to the authorities? In addition to the situation, if funds were not provided and the company closed its business what would be the fate of the open pits left in the area?’

SMALL SCALE MINING

Small scale miners are another victimised group listed by the Bomani report, A Golden Opportunity?, and Mining for Life. In the reports, the government and the mining companies are accused of acting like ‘playboys’ who are often not serious on issues affecting the peoples’ livelihoods. The Bomani report states that, ‘Collectively these groups of small scale mining investors were demoralized because of being left out in law and protocol enforcement in the mining industry.’ This group of people has always fought with the multinational mining companies and are an after-thought in the government’s mind when allocating land for mining activities.

The A Golden Opportunity? report states that large-scale mining operations have impoverished Tanzanians far more than those of artisan mining: ‘Studies by the UN’s trade body, UNCTAD [United Nations Conference on Trade and Development], show that the ‘employment effects [of large-scale mining] are negligible’ and that ‘large-scale mineral extraction generally offers limited employment opportunities, and hence has little impact on employment, at least at the macro level.’ Some estimates are that mining in Tanzania has created around 10,000 jobs in the past decade. The country’s six major gold mines employ a total of 7,135 people. However, large-scale mining has made many more unemployed.

Before the arrival of multinational companies, small-scale artisan miners dominated gold mining; they used simple tools and techniques, providing small incomes for a large number of people who were generally uneducated and poor. One study estimated that by the late 1990s, the sector employed between 500,000 and 1.5m people. By 2006, a report commissioned by the World Bank estimated that there were around 170,000 small-scale miners in Tanzania. Comparing these figures, large-scale mining may have made around 400,000 people unemployed, part of the A Golden Opportunity? report claims.

There are also many complaints of actual killings of artisan miners and the removal of small scale miners from Bulyanhulu before Barrick Gold took over from Sutton Resources (another Canadian mining company). These families’ lives are currently full of hardship and uncertainty; their resettlement from Bulyanhulu left much to be desired.

‘My sons were buried alive in the mining shafts when they went back to continue with artisan mining activities by permission from the government. I know that Barrick will not let the truth be known but will continue to call us into meetings which have no other purpose than to silence us with empty promises,’ said Melania Baesi, an artisan miner and a mother whose two sons were allegedly buried alive in the takeover operation.

TREATMENT OF WORKERS

Among other complaints directed at it, Barrick Gold Corporation in Tanzania heads the list of shame for the way it treats its employees. In October 2007, it fired over 1,370 employees after the latter demanded their rights. The employees complained before the journalists who visited them at the end of November 2008 of how Barrick creates problems in order to get rid of the enlightened employees standing up for their rights. ‘We were asking the company to make clear issues relating to medical insurance as they always fired workers who were affected by the chemicals used in the operations. But there were also salary, capacity building and other benefits which other employees from other countries enjoy but not accorded to local manpower who do most of the most dangerous jobs in the dark tunnels,’ said Salum John, former employee of Barrick Gold Corporation’s mining site in Bulyanhulu.

The concluding comment of the Bomani Commission’s report says, ‘Most of the officers said the contribution of the mining industry in the mining zones was not satisfactory compared to the magnitude of the mining companies with the economic improvement in the foresaid zones. They said in most cases, aid is given out without considering the intended community…it is also in the mining zones where locals have remained poor instead of being economically stable after the coming of foreign large scale mining companies.’

*Evans Rubara is a theologian cum investigative journalist. He is at the Norwegian Church Aid Tanzania. Evans is actively involved in the struggles common to all human rights activists in Tanzania. His work involves a journalistic approach to media advocacy training, awareness creation, sensitisation and social mobilisation for an equitable society.

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*For a complete pdf version of the report ‘A Golden Opportunity? How Tanzania is failing to benefit from Gold Mining’ please see:
http://www.wcrp.org/resources/reports/tanzania-mining-report

*For an executive summary of the report and its recommendations see:
http://www.africafiles.org/article.asp?ID=19218

 

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