Tuesday, July 11, 2006

Tanzania starts talks on mining law

I expect that this trend will continue. Investors and International companies must understand that natural resources are major income source for many developing nations.

Tanzania has started preliminary talks with mining companies on renegotiating mining laws to give greater benefits to the country, President Jakaya Kikwete said on Tuesday.

Under existing mining laws, Tanzania's government earns 3% royalty fees from its minerals and imposes a 30% corporate tax that kicks in only after 100% depreciation of a company's capital investment in the country.

"That's where the problem is. Some mines are closing down after years of operating but before Tanzania can accrue any gains and we wonder whether they have made losses all along. So, we need to renegotiate this aspect," Kikwete told Reuters in South Africa on the sidelines of a technology conference.

"Talks on this question started yesterday (Monday). We are not trying to intimidate anyone. The companies appear to understand our position. We want a win-win situation, where the Tanzanian people can gain from their natural resources."

Mining is at the heart of Tanzania's efforts to boost growth. Tanzania's economy expanded by around 6,9% in 2005 but that rate is forecast to decline to 5,8% on spiralling fuel costs and drought.

Top gold miner AngloGold Ashanti, dominant diamond company De Beers, both part-owned by diversified miner Anglo American Plc, as well as RandGold are some of the key players in Tanzania's mining industry.

The companies were not immediately available to comment.

Kikwete said he had not set a deadline for any changes to the tax structure and Tanzania would negotiate in good faith.

In a wide-ranging interview, Kikwete also said that the government had intensified its fight against HIV and AIDS, and was using its own cash and funding from the US government and private initiatives to cut infections.

The prevalence rate had dropped to 7,3% from 8%, but that was still too high. Some 2-million Tanzanians are thought to carry HIV or AIDS and 440 000 of them need life-prolonging anti-retroviral (ARV) drugs, Kikwete said.

Under a five-year programme, Tanzania hoped to get ARVs to all people who needed them from a coverage of just 30 000 now, he said.

"It is a matter close to my heart. It is a big challenge and unless we tackle it, our young people could be decimated," Kikwete said.

Kikwete won Tanzanian presidential elections last December and has put sustained growth of east Africa's largest country and fighting corruption at the top of his agenda. - source

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