Friday, September 2, 2011

Tanzania raises royalty fee on gold exports

DAR ES SALAAM, TANZANIA- The third largest gold producer in Africa, Tanzania, has attracted significant investment in the mining sector over the past decade and it is planning to conclude negotiations with mining companies next month to allow the government to raise royalty payments on gold exports from three percent on net income to four percent of gross export value.

 According to the Minister for Energy and Minerals, Mr William Ngeleja, the need for negotiations to raise is due to the fact that for the last five years, Tanzania's annual gold exports have tripled to US$1.5 billion due to the increase in the price of gold, but Government revenues have remained at around $100 million a year.

 "We drafted a new (mining) policy in 2009 and enacted a new mining Act last year, among other things, to address the shortfalls identified in the past. We have now decided that the Government shall own a stake in all future mines," Minister Ngeleja added.

 He said that the negotiation with the mining firm is still in a move until September this year, whereby the government will prepare a conducible environment for miners to start paying royalty based on the new formula so as to make the mining sector participate in contributing handsomely to the national revenue.

"I don't see any way that these companies will not agree to the new royalty regime ... Talks are proceeding very well," said the  minister

Ngeleja said the Government would not impose the new royalty payments on existing mining companies, but would seek voluntary compliance from the firms.

"We have succeeded to ensure some of the mining companies start paying corporate tax, which has been a source of public outcry. Resolute Mining Company for example, is now paying 30% corporate tax," he said.

With the new law, gross revenue royalty rates will rise from from 3% to 4% while for diamonds the rate will rise from 5% to 6%. For others minerals - 7% for uranium and 3% for any other minerals.

Meanwhile, the Resolute Mining Limited has released a full year (2011) statement of the progress gold production to the host countries including Tanzania. A company statement last week showed  its full year (2011) output dropped 6% despite higher fourth-quarter production whereby Tanzania and Australia reported lower yearly output.

According to Resolute global operations, produced 330,859 troy oz of gold for the year ended June 2011, compared with 352,302 oz the previous year. Quarterly production increased 1.9% to 85,421 oz, from 83,790 oz in the June quarter last year.

Resolute said that the Tanzanian operation, Golden Pride, production was 25,000 oz less in 2011, than in 2010, with full-year output falling to 122,921 oz. Production declined to 31,201 oz in the three months to June, from 34,488 oz a year earlier.

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