Tanzania agrees new mining deals to boost tax flows

Tanzania agrees new mining deals to boost tax flows

Tanzania has agreed new mining deals with two companies including Barrick Gold that will boost tax revenues for the govenment and was in talks with others, President Jakaya Kikwete said on Tuesday.

Under the new agreements, already agreed with Canada’s Barrick and Australia’s Resolute Mining Ltd , a tax concession was removed that would bring forward tax payments, he said.

“It will allow companies to pay tax earlier,” he told a news conference after he gave a speech at the Indaba Africa mining conference in Cape Town.

Tanzania, Africa’s third biggest gold producer, was in talks with other mining companies about revising their agreements, including South Africa’s AngloGold Ashanti Ltd , he added.

Generous capital tax concessions originally meant to attract investment have the effect of giving mining firms a full tax holiday of around 20 years, Commissioner for Minerals Peter Kafumu told Reuters.

Under the new agreements, firms would pay the existing corporate tax of 30 percent and a royalty of 3 percent much earlier, although the exact timing would vary depending on the life of the mines, he added.

“Much of that dialogue has been how to ensure that the exploration of mineral resources benefitted the investor, the government and the local communities,” Kikwete said in his speech.

The government was also pressing companies to use more local people as staff and source locally as many services as possible.

“If all this is done, this will endear the mining companies to the people, it reduces resentment,” he said.

Kikwete also said the country wanted to exploit big coal and iron ore deposits.

“We have been discussing with a number of interested parties,” he said.

South African, Australian and U.S. firms had expressed interest in the Mchuchuma coal field with high grade deposits and the Liganga iron ore deposit nearby, Kafumu said.

A tender was currently being prepared and would be ready in about a month, he added.

Source: Reuters via Yahoo News

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