Tanzania miners 'complying' with new royalty ratesBy CITIZEN Reporter | Monday, June 4 2012 at 15:03
Giant gold mining companies African Barrick Gold (ABG) Ltd, Geita Gold Mines and Resolute Gold Mines Ltd have started abiding with Tanzania's new mining law after concluding a series of negotiations with the government.
The Tanzania 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.
The new Act overruns the previous Mining Act 1998 which is credited with liberalising the lucrative sector and attracting a surge in foreign direct investment. But there was an outcry to the effect that Tanzania was not getting a fair deal from the mining firms.
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.
But the Mining Act 2010 could not legally affect those companies that had entered minerals development agreements with the government under the previous law.
To that effect, the government went into negotiations with the miners in a bid to persuade them to adhere to some of the terms instituted under the new law, including pushing up the royalties.
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