Gold News

New Tax Could Threaten Gold Mining in Tanzania

FOREIGN EXCHANGE earnings from Gold Mining operations have overtaken those from tourism in Tanzania, according to the latest government data.

Rising Gold Prices have led to the value of gold exports quadrupling over the past six years to $2 billion. There are now however calls for Gold Mining firms to pay more tax to the Tanzanian government.

"Tanzanians look at the Gold Price and think the country should get more out of it," Sebastian Spio-Garbrah, managing director and chief analyst at consultancy  DaMina Advisors, tells the Financial Times.

In common with a number of African governments, Tanzania is looking at ways of extracting more money from its Gold Mining industry, with the 2010 Mining Act proposing to raise the tax on gold production royalties from 3% to 4%.

"Almost all African countries are changing their mining laws and making them tighter," says Spio-Garbah.

"It's nothing out of the ordinary."

The Tanzania Mining Report, published last week by Business Monitor International, predicts that Gold Mining in Tanzania could be poised for strong growth.

"Growth of Gold Mining, which has slowed down in recent years would recover and post strong growth in 2013," the report says.

"Much of this growth will be driven by African Barrick Gold, which has four projects in the country [but] poor infrastructure could be a significant obstacle on production growth and may see projects delayed."

BMI's report also says that higher taxes could see Gold Mining firms concentrate their efforts on other parts of Africa.

"Tax rises, combined with lack of adequate infrastructure and the absence of huge mineral deposits compared with many of its neighbors could push investors elsewhere on the continent," the report says.

"We have heard that before, haven't we?" responds Tundu Lussu, and environmental lawyer who has done extensive research on the Gold Mining industry.

"Investors in mining will be taxed like everybody else and if that makes the sector less attractive to them then they’d choose between staying and paying fairly or leave and stop the raping of our non-renewable resources."

Elsewhere in Africa, Congolese delegates at a Gold Mining conference being held in Cape Town this week were abducted and beaten, Bloomberg reports. At least five people were attacked by men protesting Congo's election results.

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