Mining bigwigs ask for breaks

[BAK]

Mining bigwigs ask for breaks

2009-04-19 14:00:05
By Kate Meyer​

As Parliament heads into session next week with the possibility of passing a new, tougher mining policy, mining industry heavyweights have asked the government to defer existing royalties and levies because of the global recession, The Guardian on Sunday has learnt.

In a letter sent this week to Prime Minister Mizengo Pinda and copied to Minister for Energy and Minerals William Ngeleja, the Tanzania Chamber of Minerals and Energy outlined troubles the industry is facing and asked for a short-term deferment of the 0.3 percent district levy placed on mining operations, as well as deferment of royalties on diamond and tanzanite, until the price of luxury goods can rebound from the past year�s global slump.

The request comes at a time when prevailing public opinion, backed by a report from a presidential select committee on mining in the country, has considered the industry to have been under-taxed for years.

In 2007 President Jakaya Kikwete formed an 11-member committee headed by Judge Mark Bomani to review all existing mining contracts to gauge their efficacy in generating government revenue.

The committee made recommendations last year for a new mining policy that would increase royalties across the board, but none of the recommendations have yet been made into law.

The chamber�s letter notably asked that the current policy be kept in place for the foreseeable future, perhaps as a preemptive measure as Parliament heads into its next session Tuesday.

``Of importance is to consider retaining the present investment framework and that a moratorium of 4 to 5 years be considered,`` the letter reads. ``It should be noted that Tanzania is increasingly perceived as not being an investor-friendly, reasonable-risk and high-return country.``

Ami Mpungwe, the Chamber�s chairman and the managing director of mining firm TanzaniteOne, denied that the letter asked for any tax deferments, and said the copy of the letter availed to The Guardian on Sunday could not have been the final draft sent to Pinda and Ngeleja.

Members of the chamber, however, confirmed to The Guardian on Sunday that the letter did include the requests, and that the chamber had agreed as a group to ask for government action on the matter.

``There was a general agreement within the chamber to ask the government for some level of action,`` said a source familiar with the chamber�s proceedings. ``It was an unordinary request because it is an extraordinary circumstance.``

Mpungwe declined to disclose the final version of the letter that he referred to, on the grounds that it was private correspondence, but he said the letter contained nothing more than an appraisal of the currently precarious state of the industry.

``That was a different draft. Given the current political climate I wouldn`t ask for deferment of royalties and levies,`` he said. ``Politically it would be irresponsible.``

Minister Ngeleja had not yet read the letter from the chamber when contacted by The Guardian on Sunday this week, but he said the ministry`s challenge is to strike a balance between making the country attractive to investors and making sure that Tanzania shares in the profits accrued from its valuable natural resources.

�We are trying to be realistic enough not to frustrate existing investors,� he told The Guardian on Sunday.

Still, he said that long-term policy changes would not be tailored to take into account the current financial circumstances, however dire they may be.

``What we are saying is that the financial crisis that is facing the world is just transitional,`` Ngeleja said. ``Whatever we are doing we cannot do it in coordination with a one-, two- or three-years event. We are laying the foundation for a sustainable mining sector.``

Ngeleja said a new mining policy would be effected this year, but he would not speculate on when the issue would be brought before MPs for a vote.

Mpungwe said that he was confident that mining industry executives would be included in the lead-up to any policy changes proposed in Parliament.

``I will not raise concerns now because the minister and the government has assured us that the chamber will be involved in the process,`` he said.``This process hasn�t started, so it would be too early and irresponsible on my part for me to comment on that.``

The chamber argues that even though the economic crisis has hit industries across the board, it has hurt the mining industry disproportionately in Tanzania because the industry depends on backing from some of the international financial institutions that have crumbled as a result of the fiscal meltdown.

``Among the areas that were hit most included stock exchanges, financial institutions, banks and all those things. Most mining companies depend on them�when all these institutions have been hit�obviously areas like exploration and expansion are starved of money,`` Mpungwe said.

Kabanga Nickel has come to a standstill with the $70m feasibility study needed before it can begin operations, and more than 450 people have already been laid off from the company, according to the chamber�s letter.

The Mkuju River Uranium project has also effectively halted exploration, it said, with plans to cut expenditure by 60 percent over the next six months by reducing 65 percent of personnel.

The cuts in exploration funding in particular could set the industry back for years after the recession has ended, Mpungwe said.

``The mining industry is affected both ways, in terms of ongoing mining activity and new opportunities, but without exploration you cannot establish mines,`` he said.

Mpungwe`s own TanzaniteOne has already cut working costs by 40 percent by reducing expatriate salaries by 37 percent and employing 33 percent fewer experts, and it is still mulling a 28 percent cut in local staff.

When asked if any members of the chamber were considering pulling out of business in the country altogether, Mpungwe said: ``Pulling out is a too strong statement.

Some are restructuring in terms of retrenchment and that kind of thing. Some are choosing to suspend activities until conditions improve.``

SOURCE: Sunday Observer

 

[Jasusi]

The only answer to these bigwigs is that they should stop mining until the economic situation stabilizes. Why should we give them a break in levies and taxes while at the same time they continue to ship out our gold?

 

[Kang]

Hiyo inaitwa power move! Tuone sasa kana wabunge wetu wana ubavu wa kuwabana.

 

[Alpha]

This is just disgusting!!!

Some of these companies started production when gold was at $300 an ounce. Gold went up to almost $1000, triple what it was when they started operations. I repeat triple.

What did Tanzania get for this sudden increase in price. NOTHING!!!

Now these same companies are asking for breaks. Give me a break!

Our stupididty continues to be our downfall. When will this country wake up?

 

[Buswelu]

Hii ni ujinga wa hali ya juu sana ambao tanzania inaweza fanya kwa hawa jamaaa...kwa kuwapa unafuuu au kutolipa kodi Jasusi kasema ukweli....haiwezekana kuwaachia wakati kila wiki wanasafirisha helcopter mbili za zahabu kwenda wanako jua....kila moja ikiwa na Mawe 20 mfano wa tofali la kuchoma....lenye kilo 25 = 500 za dhahabu so hapo tunaweza sema wanasafirisha kilo 1000 ambazo ni 32.22 oz kwa wiki..x 4 weeks unapata 129 oz.Yaani royality ni kama mapato ya miezi miwili kwa mwaka mzima.
Hili li serikari unaweza sikia yamekubali...

Buswelu

 

[Kokolo]

This is just disgusting!!!

Some of these companies started production when gold was at $300 an ounce. Gold went up to almost $1000, triple what it was when they started operations. I repeat triple.

What did Tanzania get for this sudden increase in price. NOTHING!!!

Now these same companies are asking for breaks. Give me a break!

Our stupididty continues to be our downfall. When will this country wake up?

Gold price sasa hivi ni zaidi ya $1000.00 per ounce na investors kwenye stock market wengi sasa hivi wanakimbilia kwenye gold/Diamond/Tanzanite/etc. why they are asking for breaks, this is stupid, sasa hivi wanasema price ya Tanzanite imeshuka uku wakiendelea kuchimba baada ya miaka 2 price itaongezeka mara 10, kweli CCM ni Chama Cha Majambazi.

 

[MzalendoHalisi]

the cost ya sisi Watz kulala na kuongee ktk JF tu na kutegemea serikali ina nia nzuri from mikataba ktk proceeds za madini!

This is the price we must pay!

Sema tunaamka taratibu..Ishalah!

 

[BAK]

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

THISDAY REPORTER
Dar es Salaam​

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.

 

[Zungu Pule]

Ninafikiri Ami Mpungwe ni fisadi ambaye sijamsikia sana humu JF. Au nilipitwa na huo mjadala?

 

[BAK]

EDITORIAL: Hide and seek on mining policy not funny

EDITORIAL
THIS DAY
DAR ES SALAAM ​

REPORTS that the tabling of the new mining bill in parliament is not even in the schedule of the upcoming parliamentary session are not very encouraging to the Tanzanian public which has kept its fingers crossed as it awaits for action on the mining policy that would ensure that the country's mineral resources are not siphoned off by the big fish at the expense of the national economy.

It is now approximately three months since the Minister for Energy and Minerals Development, William Ngeleja, was expected to introduce the bill in parliament, a period during which public scepticism has soared over the issue.

To understand the dynamics behind the failure of the mineral resources sector one has to look at the disparity that exists between the record gold production figures posted by multi-national companies engaged in the sector and the meagre taxes they remit to the government. There are many critical questions that beg for answers.

If indeed, for instance, we are the third largest gold producers on the continent then we should be able to show something of it. With the country's annual gold production projected to hit the 2 million ounces mark this year, compared to 1.7 million ounces last year, how come a bigger portion of us are still living in absolute poverty?

If the government was not ready to make changes to this significant sector, why did it dupe the public into believing that it was doing something? What was the point of spending tax payer's money on a parliamentary committee whose resolutions are not being taken seriously? Is the government scared that if it resorts to the committee's resolutions the investors will scamper away?

Does it make any business sense that a government which professes to be the custodian of its people stands guard while the country's virginity is being taken away?

It is time for the government to wake up to the fact that due to the poor running of the sector the country has, over a period of seven years, lost in excess of 500bn/- in wanton tax evasions, unremitted corporation taxes and miserly royalties paid by the same gold mining companies the government handles with kid gloves.
It should not be forgotten that these same multinationals continue to stand in the way of hundreds of thousands of tanzanians who would otherwise be employed in the mining sector. Most of these people have family responsibilities that need fulfilling but which they are not able to meet because they have been pushed out of their sole source of livelihoods by the big companies.

The ripple effect resulting from such unemployment is underlined by a failure to provide their children with basic needs such as education, better health care, a proper diet and better housing so as to empower them for a tough future.

We call the government to listen to its citizens instead of aligning itself with 'development partners' whose interests lie in ripping off the country at the slightest opportunity. These multinationals are involved in nothing other than a mega heist. The least our government should do is to implement the mining committee's report besides compelling the companies to perform their corporate social responsibilities that they have clearly forgotten!

 

[Bobby]

Bubu thanks a lot kwa hizo nondo. Nimeona delays sehemu kibao, wizarani na kwingineko. Lakini nadhani wote tunajuwa moja ya sababu ya hizo delays ambayo ni kuendekeza siasa. Huyo mjinga Ngereja sisi ndio tunamlipa mshahara lakini cha ajabu yuko busy sasa na kampeni huko Busanda jamani hizi kazi nyeti hivi atazifanya saa ngapi? Na hivi hawa wajinga wanapoenda huko kwenye kampeni who pays for them ni hizihizi kodi au chama chao kinawalipia? Shame on them kwa kweli upuuzi kila sehemu why and when will they stop this stupidity. Wewe badala ya kushughulikia masuala yanayotufilisi uko busyyyyy na uchaguzi si uwaachie makada uchwara akina tambwe?