MAC: Mines and Communities

Tanzania fails to implement mine tax reform, as Barrick comes under fire

Published by MAC on 2009-05-27

The Tanzanian government is being criticised for failing to implement a mining bill which would give it 10% stakes in the country's gold mines, remove tax breaks and incentives from mining companies, and increase royalties.

Meanwhile, evidence is growing that the country's biggest gold miner, Barrick of Canada, was been guilty of a major chemical spill at its North Mara mine, earlier in May. See:

Tanzania government probes North Mara Gold Mine over river pollution

Nichola Bario

Dow Jones Newswire

20th May 2009

The Tanzanian government is investigating the operations at North Mara Gold Mine following a chemical spill at the mine last week which polluted the nearby Tigithe river leaving thousands of residents without water for domestic use, a government official told Dow Jones Newswires Tuesday.

Machage Bartholomeo, a councilor in the Mara Region, said a government team is investigating the circumstances which led to the spill as well as mitigation measures put in place by Barrick Tanzania Ltd., owners of the mine. "Investigations will establish whether the mine's waste disposal measures comply with Tanzanian laws" he said. The team is headed by the regional minerals officer and comprises civil servants as well as councilors, he said. The team will report to the ministry of energy and minerals by the end of the week, he added.

Chacha Benedict Wambura, the executive director of the foundation HELP told Dow Jones that the government had already started showing signs of siding with the company. "The law is clear, the government is supposed to protect the environment and its citizens. The matter was brought to the attention of relevant government departments last week but nothing has been done," he said.

According to Wambura, the Tigithe River is a source of water for more than 2,534 households in the region. Crops and pastures along the river banks have dried up and up to four heads of cattle died after drinking the water last week, Foundation HELP said.

Wambura said the management only took action after locals threatened to block roads towards the mine on Wednesday, a charge denied by Barrick Gold Corp. (ABX), the Canadian owners of the mine.

Last week, the local unit Barrick Tanzania Ltd. said it had taken water samples from the river, and the acid level was back to normal after rising following the spill on Tuesday. The company partly blames the spill on vandalism of the mine's waste pipes, by locals. North Mara has had stormy relations with local residents and both sides blame each other for strained relations.

*Nicholas Bariyo contributes to Dow Jones Newswires.

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Fresh government delay in revision of mining laws: 'Consultations' still going on, official quoted as saying


Dar es Salaam

21st May 2009

The government has come under fire for unexplained delays in tabling a much-awaited bill intended to make key changes to the country's mining sector legislation.

"I don't know exactly what has stalled this bill. In fact, even changes to the existing national mining policy have not been concluded, and we have not received any feedback from the government," parliamentary energy and minerals committee chairman William Shellukindo told THISDAY in an interview.

Responding to international media reports that the government is still consulting with various stakeholders including mining companies and the Tanzania Chamber of Mines before tabling the bill, Shellukindo said his Bunge watchdog committee has not been given any explanation for the delay.

"The tabling of the new mining bill is not even in the schedule of the upcoming parliamentary session," added the committee chairman, who is legislator for Bumbuli constituency on a CCM ticket.

An official with the Ministry of Energy and Minerals Development has been quoted by the Dow Jones Newswires service as saying the government is now in the process of finalizing its consultations with the various stakeholders, before going ahead with the tabling of the bill.

The minister, William Ngeleja, was initially due to introduce the bill during the last National Assembly session in Dodoma, back in February.

Last month (April), the Tanzania Chamber of Mines issued a warning to government not to raise taxes, saying such a move could deter further investment in the key sector.

The Dow Jones Newswires report also quoted Teweli Teweli, spokesman for Barrick Gold Tanzania Limited - the country's largest mining investor company - as saying the government had not consulted the said stakeholders about proposed changes to the laws.

The government has proposed taking 10 per cent stakes in the country's numerous gold mines, removing tax breaks and incentives, and increasing royalties for the sector.

The proposed amendments to the country's mining legislation follow recommendations made by a presidential mining sector review committee chaired by former Judge Mark Bomani.

Tanzania's mining sector is dominated by gold mining, with the country now ranked as Africa's third-leading gold producer after Ghana and South Africa.

The nation's annual gold output is expected to hit 2 million ounces this year, compared with 1.75 million ounces last year, following the commissioning of the Buzwagi Gold Mine in Shinyanga region last month.

Apart from the Canadian-headquartered Barrick Gold Corp., other international mining companies operating in Tanzania include Australia-based Resolute Limited and South Africa-based Anglo Gold Ashanti Limited.

Minister Ngeleja was yesterday not immediately available to confirm exactly when the government intends to table the proposed amendments to the mining sector legislation.

The shadow minister for energy and minerals in parliament, Habib Juma Mnyaa (Mkanyageni-CUF), was like Shellukindo also critical of the government for the delay in tabling the new mining bill.

The opposition lawmaker said he was puzzled as to why the government was dilly-dallying on the matter.

"I don't know what's going on. There are a lot of delays in the implementation of important decisions in this ministry (of energy and minerals)," he told THISDAY by phone from Pemba Island.

Mnyaa, who is also a member of the parliamentary energy and minerals committee, said legislators are sure to seek answers from the government on this particular delay.

"We haven't received any feedback from the government. Our committee will start holding its pre-budget meetings on May 25, and we will ask the government for an explanation," he said.

The Clerk of the National Assembly, Dr Thomas Kashililah, confirmed to THISDAY that the government is yet to submit the mining bill to his office for tabling in parliament.

A scathing independent report titled 'A Golden Opportunity? How Tanzania is Failing to Benefit from Gold Mining' highlights the inherent problems in Tanzania's mining sector regime, where foreign-owned mines continue to post record gold production figures, but pay minimal taxes.

The 2008 report estimated that the combined loss to the country over the past seven years, as a result of low royalty rates, unpaid corporation taxes, and tax evasion by major gold mines, amounts to a staggering $400 million (approx. 500bn/-).

The report also noted that the concentration of gold mining activities in the hands of large multinational companies, at the expense of small-scale artisan miners, has left at least 400,000 people out of work in the country.

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