Tancoal Energy has received a letter of demand from the Tanzanian Ministry of Minerals regarding payment of US$1 139 944.50 for outstanding underpaid royalties for the period August 2011 to June 2014.
The outstanding royalties are made up of $759 963 in underpaid royalties and 50% penalty of $379 981.50.
The letter states that if the payment is not made then permits will not be issued to allow coal to be transported to customers after 26 August 2018.
Tancoal contacted the Ministry and was advised that the demand for the underpaid royalty is on what they have estimated Tancoal’s customers pay for the transportation of coal after it has left Tancoal’s Kitai sales point.
Tancoal Energy says written confirmation of how the royalty was calculated has been requested but not yet received.
While Tancoal says that it does not agree with the demand and is in contact with the Ministers office to review the interpretation of the Mining Law, Tancoal is taking the letter of demand seriously and has met with the Ministry to ask for clarification on the letter and subsequently has corresponded formally requesting clarification and time for the matter to be duly considered before any action is taken by the Ministry.
Tancoal, who sells its coal directly to its customers, mines its coal at the Ngaka coal mine. It is then crushed and hauled to Kitai which is 50 km from the mine site. At the sales point further final processing of the coal is done, including sorting and sizing dependent on the customers demand. From there, coal is sold to customers ex-Kitai. This means that all Tancoal coal supply agreements have Kitai as the delivery point.
Tancoal Energy is a joint venture between Intra Energy Corporation (70%) and National Development Corporation of Tanzania (30%).