June 12, 2011 / 11:15 AM / 9 years ago

Tanzania won't impose tax on current mine cos

DAR ES SALAAM (Reuters) - Tanzania will not impose a proposed super profit tax on existing mining companies, but will negotiate with the companies to have them pay the new tax, the east African country’s mining minister said on Sunday.

A miner is seen in one of the mines in the Manyara region, the only place where the blue gemstone tanzanite is found in Tanzania, March 30, 2008. REUTERS/Antony Njuguna (TANZANIA)

William Ngeleja, Tanzania’s energy and minerals minister, said if implemented, the government would negotiate with existing companies how they will pay the tax, but that it will automatically apply to all new entrants into its mining sector.

Tanzania, one of Africa’s top gold producers, is considering a “super profit” tax on earnings from minerals as one of the ways to fund its five-year development plan.

AngloGold Ashanti and African Barrick Gold (ABG) had said last week that existing arrangements should shield their operations from any moves to impose higher taxes, but Ngeleja’s comments cast some uncertainty over the situation.

“We will not impose the proposed super profit tax on existing mining companies. If implemented, we will have to negotiate it with the companies because they already have agreements in place with the government,” he told Reuters.

“We are studying the proposals ... it is something we are considering. If they become law, it will be an automatic requirement for new entrants in the mining industry to pay the super profit tax,” he said.

“We will involve all stakeholders in Tanzania’s mining sector in negotiations before the proposal turns into law.”

AngloGold said it did not see any impact on its Geita mine in Tanzania, which produced 94,000 ounces of gold in the March quarter of 2011, while African Barrick Gold also said mineral development agreements in place guaranteed a stable tax regime.

The move follows similar steps in other producer countries that have sought to increase fiscal revenue from the mining industry and to take advantage of rising prices.

Australia was among the first to consider a hefty resource tax, but it had to climb down from initial proposals for a headline tax of 40 percent after pre-election talks with mining giants including BHP Billiton and Rio Tinto.

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