Tanzania reviews its mining contracts

Dar es Salaam - Tanzania was reviewing mining contracts to ensure the government got a bigger share of revenues, Mining and Energy Minister Sospeter Muhongo said on Friday.

Muhongo told parliament that Africa’s fourth-largest gold producer was talking to mining companies to get higher taxes and royalties for its 45 million people following growing public demand for more benefits from the country’s natural resources.

A bulldozer moves rubble as villagers search for gold contained in discarded waste rock from the North Mara mine operated by African Barrick Gold in Nyangoto, Tanzania. African Barrick Gold has agreed to pay a service levy from next month. Photo: Bloomberg. Credit: Bloomberg

“The discussions are on changing some provisions of these contracts to generate more revenues for the state,” Muhongo said.

As part of the reviews, he said, African Barrick Gold had agreed to pay a service levy from next month, equivalent to 0.3 percent of turnover, significantly higher than an annual payment of $200 000 (R2.1 million) agreed in the mining contracts.

The Tanzanian-focused firm, a unit of Barrick Gold, the largest gold mining company, also agreed in 2012 to pay higher royalties following contract reviews.

Muhongo said the government had launched talks with other mining companies in Tanzania for similar contract reviews.

Major mining companies operating in Tanzania include JSE-listed AngloGold Ashanti and Petra Diamonds and Richland Resources, both listed on AIM, the London Stock Exchange’s junior market.

The minister added that the government would take new natural gas legislation to parliament in November as part of plans to put in place legal and regulatory frameworks to govern its fast-growing energy sector.

Analysts said delays in approving gas legislation could stifle future investments in big gas discoveries offshore.

“By April, 46.7 trillion cubic feet of gas had been discovered in the country… of which 83 percent is in deep-sea offshore blocks and 17 percent onshore,” Muhongo said. - Reuters