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Mining companies in Tanzania yet to pay raised royalty fees
January 2nd, 2012

Tanzanians are yet to start benefiting from the new mining law which raised royalty paid on precious minerals including gold from three to four per cent because mining companies haven’t migrated to the new tax regime.

According to investigations by The EastAfrican, even though the largest producer of gold in the country, African Barrick Gold, was said to have agreed to start paying the four per cent, it hadn’t realised this with actual payments.

A source at the Tanzania Minerals Audit Agency (TMAA) told The EastAfrican that “as far as I know, not a single mining company has started paying the four per cent royalty but at least one or two companies are now paying the 30 per cent corporate tax, which most of the mining companies haven’t been paying.”

Minister for Energy and Minerals William Ngeleja told The EastAfrican that the government was currently negotiating with the mining companies to have them start paying royalty under the new mining law.

“However, there are issues that need to be sorted out because the existing Mineral Development Agreements, signed between the government and the mining firms are still legally binding.

In such a situation there are no short cuts but to negotiate and the other issue is that the firms are still owed millions in VAT refunds,” said the minister. Other companies the government is negotiating with are AngloGold Ashanti (Geita Gold Mine) and Resolute Tanzania Limited (Golden Pride Mine).

African Barrick Gold runs four mines in Tanzania that include Bulyanhulu Gold Mine, Tulawaka Gold Mine, Buzwagi and the problematic North Mara.

The minister said that the firms want the matter on VAT refunds settled before they could migrate to the tax regime.

Mid this month the ministry announced that African Barrick Gold (ABG) had agreed to raise the royalty rate it pays on gold exports, this was contrary to what the minister had told this paper — that they were still negotiating.

As the negotiations were going on it emerged that the Tanzanian government was yet to renew a second special mining for ABG’s North Mara Gold Mine.

According to the Ministry of Energy and Minerals, gold mining companies had by last year managed to invest some $3 billion in mining activities.

This financial year (2011/2012) the government forecasts to collect $36.3 million from Golden Pride as income tax up from $9.2 million last year.

It also expects to collect income tax to the tune of $50 million from AngloGold Ashanti’s Geita Gold Mine over the same period.

Last November, the government collected $6 million from the same mine in the form of income tax. From 1998 to last year the government says it managed to collect $514.7 million from the mining companies.

The mining sector’s contribution to the GDP has been minimal at about 3 to 4 per cent but the government says it wants to raise this to 10 per cent in the near future.


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