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Friday, 16 November 2007

Mineral Royalties Watch (Tanzania)

The Post reports some interesting developments in Tanzania, where the Government plans to review the mineral agreements. Interesting to note that rather than rely on foreign experts the Tanzanians are drawing on all local talent and crucially an "all - party" approach. The approach is therefore an improvement on the DRC 'government panel' approach and certainly light years ahead of the Zambian government approach in terms of transparency and accountability:

Tanzanian President Jakaya Kikwete has appointed former Attorney General Mark Bomani chairman of the committee to review all mining contracts. In a statement issued by State House in Dar-es-Salaam yesterday President Kikwete gave the 11-member team three months to complete its work. The members include legislators from the ruling Chama Cha Mapinduzi (CCM), opposition parties, senior government officials and the private sector.

6 comments:

  1. PRESIDENT NAMES COMMITTEE

    Now Tanzania to review all mining contracts

    Tanzania is following in the DRC’s footsteps in conducting a review of all mining contracts, but whether this is just a sop to divert adverse political and civil society organisations remains to be seen.

    Author: Frank Jomo
    Posted: Thursday , 15 Nov 2007

    BLANTYRE -

    As if following in he footsteps of the Democratic Republic of Congo (DRC), investors in the mining industry in Tanzania are holding their breath as to what the future holds following the naming of an 11-member committee by the country's President Jakaya Kikwete to review all mining contracts the country has signed with foreign investors.

    The formation of the committee, which is headed by former Attorney General Mark Bomani and comprises politicians, private sector gurus and government officials, comes hard on the heels of resentment by the Tanzanian people and the civil society organizations which have claimed most mining contracts are tailor-made to suit the investors and not locals, who are the owners of the mineral resource.

    The committee has been given only three months to complete the review process and report back to the President, apparently for action. A statement issued by State House in Dar es Salaam says the committee is tasked to go through all mining contracts and other documents involving large scale mining, the tax regime in the mining sector and the rights of an investor as well as those of the government.

    In addition, the committee will meet Tanzania Chamber of Minerals and other stakeholders in a bid to review the system used by the east African nation to supervise large scale mining activities.

    It is yet to be seen if recommendations from this review process will be acted upon following the Tanzanian government's failure to adjust mining royalties as earlier recommended. In January this year Kikwete told the 2007 Mining Indaba in Cape Town that his government was mulling raising mining royalties in the country in order to raise the revenue it collects from investors in the mining industry.

    But two months down the line, Commissioner of Minerals in the Ministry of Energy and Minerals Dr. Peter Kafumu contradicted his president saying there were only remote chances that Tanzania would review mining royalties in order to make it a competitive destination for mining companies.

    "Basing on the global standards and the nature of environment, our royalty is highly competitive and charging anything beyond that will definitely discourage investors," Kafumu told the media in March.

    Tanzania, currently Africa's third largest producer of gold, claims a three percent mining royalty for most minerals and five percent for diamonds and gemstones. It is touted as having a conducive mining environment that has seen miners pumping into the country some US$2 billion in the past decade, according to the Tanzania Chamber of Minerals and Energy (TCME) and in total mining companies have paid the government US$255,526,893 in taxes, within the same period.

    It is also yet to be seen whether this new committee will override another team the government formed to negotiate with miners on how best government, the people and the miners themselves can benefit from the country's mineral resources.

    This committee has been set up despite the other committee having already held talks with Barrick Tanzania, Tulawaka Mine, North Mara, Resolute Tanzania, Anglo-Gold Ashanti and Geita Gold mine, all meant to review the country's mining industry. It also comes at a time yet another committee is reviewing the national mining policy of 1997.


    http://www.boursorama.com/forum/message.phtml?page=1&id_message=366830161

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  2. Interesting to note that rather than rely on foreign experts the Tanzanians are drawing on all local talent and crucially an "all - party" approach.

    Absolutely, and contrast that with the Zambian approach, of secret dealings, and Norwegian advisors.

    What are these advisors conflicting interests? What is the nature of their expertise in the mining industry? Are they going to give the same bs advice as was given to Edith Nawakwi?

    I will say this to the Zambian government - amateur hour is over. This is the future of the nation, and they can't be allowed to sell it off again behind closed doors.

    And why Norwegian advisers? What is their history in the mining industry? Have they worked for mining companies before? Do they have ongoing conflicts of interest?

    And of course, this is only about a renegotiation of the royalty tax, from 0.6% to some other insignificant number, like 3%, which is still at the low end internationally.

    Zambia's interests must come first, not the preservation of these corrupt deals made by the political elite, which sell short the interests of the Zambian people and the country.

    No more secrecy.

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  3. New Law to Give Zimbabwe Free 25% Mine Stakes

    By Business Day

    JOHANNESBURG (Business Day) -- Zimbabwe President Robert Mugabe yesterday made good on his promise to seize stakes in foreign mining companies, publishing a new law that will force miners to transfer a "free" 25% stake to the Zimbabwean government.

    Analysts said the move was likely to worsen an economic crisis that has left Zimbabwe with the world's highest inflation rate at nearly 8,000% and discourage foreign investment.

    The move will affect some of the world's biggest mining companies, including SA's Anglo Platinum and Impala Platinum , and the UK's Rio Tinto .

    The Mines and Minerals Amendment Bill is expected to be presented to parliament and approved before the end of the year, and follows the passing in September of a general bill giving 51% stakes in foreign-owned firms to locals.

    That bill did not provide for a 25% government shareholding, which will be included in the 51%.

    Zimbabwe's mines, which produce gold, palladium, chrome, platinum and diamonds among other minerals, generate 42% of the country's foreign currency earnings, according to the central bank.

    "It appears government wants a 25% freebie in the mines," Doug Verden, CEO of the country's Chamber of Mines, said yesterday. "It appears to be in precious metal mines and diamond mines, so it'll affect platinum and gold producers."

    Existing laws meant to give local investors stakes in mining companies have not yielded results, as the local investors have failed to raise the required capital.

    Verden described the draft law as unhelpful.

    "If what we are seeing at first glance from the bill (becomes law), then this is not helpful," he said.

    "However, we are still studying the bill and we will make an informed comment later this week." The chamber represents most mining companies in the country.

    In September, parliament approved the Indigenisation and Empowerment Bill, which is intended to ensure that indigenous Zimbabweans own a 51% stake in foreign-owned firms.

    "This section (of the Mines and Minerals Amendment Bill) sets out the objectives of the government to require every mining company ... to make 25% of its shares available for acquisition by the state or indigenous Zimbabweans," reads the draft law.

    The world's second-biggest platinum producer, Implats, is the foreign mining firm with the most operations in Zimbabwe, while Rio Tinto has diamond interests and the world's top platinum producer, AngloPlat, is developing a mine in the country.

    SA's Implats has said it already had agreements in place that it expected would meet the requirements of the general bill that seeks to grant majority ownership to locals, and that, in principle, it supported the aims of localisation.

    "We have not seen the latest documentation, and will not be in a position to comment until we see it," said Implats CEO David Brown.

    While Impala had already relinquished rights to "a big portion" of its mineral rights in Zimbabwe, it would need to do more to satisfy the Zimbabwean government's ownership requirements, said Stephen Roelofse, an analyst at Cape Town's Sanlam Investment Management.

    Aquarius Platinum , which runs a platinum mine in Zimbabwe in a venture with Impala, was not immediately available for comment.

    Greg Hunter, CEO of Central African Gold , which owns gold mines in Zimbabwe, said he could not immediately comment.

    Angloplat's spokesman was not available for comment.

    Zimbabwe Chamber of Mines president Jack Murewa said the industry would try to talk to the government about the proposed ownership changes, particularly the 25% shareholding the state sought.

    "They seem to have disregarded our proposals on ownership," Murewa said.

    "But our position remains the same - we're for a well-considered, phased approach - and we will continue talking to them."

    The chamber's chief economist, David Matyanga, said last month the proposed localisation of mine ownership would scare away much-needed foreign investment and hit production in a sector that was the leading foreign currency earner.

    Matyanga said Zimbabwe already had significant local involvement in the mining industry and risked losing further ground to other countries on the continent with friendlier investment policies.


    http://www.boursorama.com/forum/message.phtml

    http://www.resourceinvestor.com:80/pebble.asp?relid=38044

    Thanks for your mail , Cho .

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  4. DRAFT BILL PUBLISHED
    Zimbabwe mining firms to be forced to transfer majority stakes to locals and government
    Zimbabwe has published its draft bill on transferring majority ownership of foreign-owned mining companies to locals, including a free 25 percent stake to the government.

    Posted: Monday , 19 Nov 2007

    HARARE (Reuters) -

    President Robert Mugabe's government published a draft bill on Monday forcing mining firms to transfer majority shareholdings to local owners, including giving the Zimbabwe government a free 25 percent stake.

    The mines and minerals amendment bill is expected to be presented to parliament and to be approved before the end of the year, and follows the passing in September of a general bill giving 51 percent stakes in foreign-owned firms to locals.

    That bill did not include a provision for a 25 percent government shareholding.

    Analysts say the latest drive by Mugabe's government is likely to worsen an economic crisis that has left the southern African state with the highest inflation rate in the world at nearly 8,000 percent, and discourage foreign investment. The world's second biggest platinum producer, Impala Platinum (Implats), is the foreign mining firm with the most operations in Zimbabwe, while Rio Tinto has diamond interests and the world's top platinum producer Anglo Platinum (Angloplat) is developing a mine in the country.

    South Africa's Implats has said it already had agreements in place that it expected would meet the requirements of the general bill that seeks to grant majority ownership to locals, and that, in principle, it supported the aims of localisation.

    "We have not seen the latest documentation and will not be in a position to comment further until we see it," Implats' Chief Executive Officer David Brown told Reuters.

    Angloplat's spokesman was not available for comment.

    RISK

    Zimbabwe Chamber of Mines Chief Executive Officer Douglas Verden also said he had not yet seen the new bill: "This is not an issue I can comment on now, I'm yet to study the bill."

    But the chamber's chief economist David Matyanga last month said the proposed localisation of mine ownership would scare away much-needed foreign investment and hit production in a sector that is now the country's leading foreign currency earner.

    Matyanga said Zimbabwe already had significant local involvement in the mining industry and risked losing further ground to other countries on the continent with friendlier investment policies.

    "Of the 22 mining companies in the country, 10 are foreign owned, three are run by government, two are wholly indigenous owned, four listed on the Zimbabwe Stock Exchange and another two owned by local, third or fourth generation white Zimbabweans," Matyanga said.

    He said one of the 22 firms had an ownership dispute.

    Zimbabwe is grappling with a severe economic crisis blamed on Mugabe's controversial policies, such as the seizure of white-owned farms to resettle landless blacks.

    The veteran ruler, in power since independence from Britain in 1980, denies mismanaging the economy and says it has been sabotaged by foreign firms and western nations plotting to undermine his rule.

    (Additional Reporting by James Macharia in Johannesburg; Editing by Chris Johnson)

    http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=40058&sn=Detail

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  5. including a free 25 percent stake to the government.

    Which is an excellent start.

    Saudi Aramco started out as a 25% stake for the government of Saudi Arabia, and they ended up with 100%.

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  6. Interesting to note that rather than rely on foreign experts the Tanzanians are drawing on all local talent and crucially an "all - party" approach.

    I think the MMD should definitely include the opposition parties in consultation on the mining contracts and seek their agreement.

    I think that could create agreements that would be acceptable to everyone, and would even create more secure agreements from the companies point of view.

    And let The Post sit in on the proceedings.

    ReplyDelete

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