Giant gold mining companies, African Barrick Gold (ABG) Limited, Geita
Gold Mines and Resolute Gold Mines Ltd have started abiding to the new mining
law after concluding a series of negotiations with the government.
The government enacted the new Mining Act in 2010 under which, among
other things, raised royalty rates across the board by basing calculations on
gross profits rather than net values as before.
Royalty rates for gold are now fixed
at 4 per cent, up from 3 per cent, that of uranium is 5 per cent while diamond miners will continue to pay 5
per cent.
Both Presidents Benjamin Mkapa and Jakaya Kikwete formed a number of
committees to study the shortcomings in the mining legislations and make
proposals that would enable the country to benefit more from its mineral
resources. Some of the proposals have been included in the new law.
The negotiations, according to sources from both the government and the
mining sector, have started paying off. Discussions included other issues that
were not part of the new law, including convincing the miners to accept the
ring-fencing practice income tax, according to the Commissioner for Minerals in
the Ministry of Energy and Minerals, Mr Ally Samaje.
Ring fencing entails limiting cost recovery for an extractive project
to the revenues generated by that same project. The Income Tax Act has no
provision for ring fencing on a mine-by-mine basis, leaving companies with the
option of siphoning one mine’s revenues to offset another’s losses.
“We have been in good progress
in our negotiations with the big gold mining companies. The three gold miners,
ABG, Geita Gold Mines and Resolute have begun to pay royalties of 4 per cent.
Technically, they have graduated from paying 3 to 4 per cent in royalty
as per the new mining law,” Mr Samaje said. The commissioner, who spoke on
behalf of the ministry’s permanent secretary, said there were six gold mining
projects that are already paying royalties and taxes under the 2010 Mining Act.
They include the four under ABG namely; Bulyanhulu, Tulawaka, Buzwagi
and North Mara and Geita and Resolute gold mines.
He said while in 1999 world market prices of gold ranged between US$250
and $300 per ounce, now the price of gold is $1,700 per ounce, which is almost
seven times the price fetched by gold dealers more than ten years ago.
“Gold mining projects now are in a better advantage than they were a
decade ago. We are also in a better position to negotiate with investors so
that they spread more benefits to the citizens in terms of corporate social
responsibility projects,” he said.
The commissioner for minerals said that such positive developments in
implementation of the new Mining Act was a welcome move that must go hand in
hand with increased benefits of the mining sector to national economy.
“With these positive developments, we want to see more benefits to
Tanzanians, especially those surrounding the mines. This is possible through
corporate social responsibility programmes,” he said.
Deputy minister for Energy and Minerals Stephen Masele also says the
negotiations involved reviewing the Mining Development Agreements (MDAs)
seeking to reduce grace period from 15 to 10 years for all major gold
investors.
“There is a need to further educate stakeholders and Tanzanians in
general on implementation of 2010 Mining Act, because a lot of developments
have taken place, but many people are still harbouring doubts,” he said.
The Chairman of Tanzania Chamber of Minerals and Energy (TCME), Mr
Joseph Kahama, confirmed to The Citizen that the mining firms were implementing
the new law, specifically on royalty payments and new tax formula.
Source: The Citizen,http://www.thecitizen.co.tz
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