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Mining royalties review in Tanzania out this week

Dar es Salaam, Tanzania — 04 June 2012 – Negotiations between the Ministry of Energy and Minerals and mining companies operating in Tanzania on the review of royalties paid from minerals are at advanced stage, and the Tanzania Chamber of Minerals and Energy (TCME) is expected to give its position this week.

allAfrica.com quoted “The Tanzania Daily News” as reporting that a consultant from Africa Practice, the communications firm which handles TCME media affairs, Teweli Teweli, said the government had chosen to negotiate with individual companies as per their mining development agreements (MDAs), and not with the industry as a whole through the Chamber.

The Chamber will have its official position by Wednesday,” Teweli said. The former Barrick Gold corporation communications manager said the company, which had announced last week that it had agreed to raise royalty paid to the government by 1% to 4%, had been involved in lengthy negotiations.

“Other mining companies are also negotiating separately with the government as per their MDAs,” Teweli added.

Last week, ABG which is the largest gold miner in the country with four mines at Bulyanhulu, Buzwagi, Kahama and Tulawaka, also agreed to pay the royalty based on a new revenue formula.

The formula takes into account the gross sale value of gold sent abroad instead of its net value at point of export. The minerals ministry said in a statement that talks were proceeding with Anglogold Ashanti Limited, which owns the Geita gold mine, and Resolute Tanzania Limited, which owns the Golden Pride mine, to accept the new royalty rates.

The country started undertaking major reforms of the mining sector in 2010, following the release of the Judge Mark Bomani Mining Sector Review Commission report which, among other things, suggested the royalty be increased. The ministry said seven gold-producing mines in Tanzania had paid USD$4 billion in royalties between 1998 and last year. It added that large-scale gold mines in the country had invested some US$2.92 billion in the same period.

Source: allAfrica.com. For more information, click here.