Overseas miners in Tanzania under more pressure due to state stake law
2017-07-06 18:53:46 [Print]
BEIJING (Asian Metal) 6 Jul 17 - Foreign mining companies in Tanzania will be under more pressure as on July 4 the government of Tanzania not only amended mining and tax laws to make it mandatory for the state to own at least 16% of mining projects, but also raised export royalties.
Parliament passed the bill unanimously. This followed two other laws passed on July 3 which give the resource-rich East African nation the right to tear up and renegotiate contracts for natural resources like gas or minerals, and removing the right to international arbitration.
According to the new law, in any mining operations under a mining license or a special mining license, the government shall have not less than 16 percent non-dilutable free-carried interest shares in the capital of a mining company.
The government also left itself scope to further increase its stake in the companies.
"Apart from the free carried interest shares, the government shall be entitled to acquire, in total, up to 50% of the shares of the mining company commensurate with the total tax expenditures incurred by the government in favor of the mining company."
“The bill meant the government might take more shares in companies that it accused of owing taxes, in lieu of the money owed,” commented industry sources.
The government of Tanzania also raises royalties from 4% to 6% on gold, copper, silver and platinum exports, and from 5% to 6% on uranium exports.
Additionally, the law also gives the government the right to reject a company's valuation if it believed the price was too low. The government would be entitled to buy the consignment of minerals at the price quoted.
Parliament passed the bill unanimously. This followed two other laws passed on July 3 which give the resource-rich East African nation the right to tear up and renegotiate contracts for natural resources like gas or minerals, and removing the right to international arbitration.
According to the new law, in any mining operations under a mining license or a special mining license, the government shall have not less than 16 percent non-dilutable free-carried interest shares in the capital of a mining company.
The government also left itself scope to further increase its stake in the companies.
"Apart from the free carried interest shares, the government shall be entitled to acquire, in total, up to 50% of the shares of the mining company commensurate with the total tax expenditures incurred by the government in favor of the mining company."
“The bill meant the government might take more shares in companies that it accused of owing taxes, in lieu of the money owed,” commented industry sources.
The government of Tanzania also raises royalties from 4% to 6% on gold, copper, silver and platinum exports, and from 5% to 6% on uranium exports.
Additionally, the law also gives the government the right to reject a company's valuation if it believed the price was too low. The government would be entitled to buy the consignment of minerals at the price quoted.
