Barrick Gold Corporation (USA), NYSE:ABX, Resolute Mining Limited, ASX:RSG, Tanzanian Royalty Exploration Corp. (US), AMEX:TRX, Barrick Gold Corporation (USA), NYSE:ABX
Tanzania is emerging as a 1st class investment destination as some of the surrounding countries on the continent linger in political and union crisis.
The Government of Tanzania have remained focused on their objective of sustainable long term growth in the economy. Unlike many resource rich nations, strikes and political rhetoric on mining taxes has not emerged in the country.
Tanzania plans to conclude negotiations with mining companies early next month to allow the government to raise royalty payments on gold exports to 4 percent from 3 percent.
Energy and Minerals Minister William Ngeleja said in a presentation to parliament seen by Reuters on Monday that the government was in talks with mining companies to review various taxes in line with mining legislation passed last year.
Tanzania is Africa's fourth-largest gold producer and has attracted significant investment in the mining sector over the past decade, but there is political pressure on the government to stake claim to a bigger share of revenue from mineral exports.
Tanzania's annual gold exports have tripled to $1.5 billion in the last five years due to the increase in the price of gold but government revenues have remained at around $100 million a year.
We drafted a new (mining) policy in 2009 and enacted a new mining act last year among other things to address the shortfalls identified in the past ... we have now decided that the government shall own a stake in all future mines, Ngeleja said.
The minister said the government would not impose the new royalty payments on existing mining companies, but would seek voluntary compliance from the firms.
We have succeeded to ensure some of the (mining) companies start paying corporate tax, which has been a source of public outcry. Resolute mining company ... is now paying 30 percent corporate tax, he said.
Mineral development agreements in place guarantee a stable tax regime for existing mining companies in Tanzania for the duration of the mines' lifespan.
African Barrick Gold has four gold mines in Tanzania while Australia's third largest gold miner, Resolute Mining and South Africa's Anglogold Ashanti also have gold mining operations there.
The Tanzanian experience over the past 50 years has been in keeping with its aspirations since attaining independence, as it has maintained unity and provided largely effective and inspiring leadership on the basis of the ruling party.
It has been sensitive enough to accept change when policies or individuals have become unpopular, at times quite against its will, and thus removing one obvious reason for mass discontent that quite often surfaces in African politics.
Tanzania has become one of the fastest-emerging gold producers in Africa, and is now the continent's fourth-largest gold-producing country after South Africa and Ghana.
The earliest organized prospecting and mining in Tanzania took place during the German colonial period, beginning with gold discoveries in the Lake Victoria region in 1894. Mining began at the Sekenke Mine in 1909. After 1930, gold production was substantial and increased steadily until World War II. By 1967, the gold industry had declined to insignificance, only to revive after 1974-75 when the world gold price increased greatly. Beginning in April 1990, the Bank of Tanzania began buying gold at the world market price through commercial banks, paying miners in Tanzanian shillings calculated at the parallel-market rate for the US dollar rather than at the official rate.
Diamond mining, which had been relatively minor prior to 1940, received a major boost with discovery of the Mwadui Mine in 1940.
Besides gold and diamonds, which have long been the mainstays of mineral production, mining of other commodities has been relatively modest, namely for copper, lead, phosphate, coal, kaolin and gemstones.
In the late 1980's, the government attempted to capture the revenues being generated from gem mining by licensing private companies to buy, cut and export gemstones being produced by small-scale miners. Coloured gemstones (excluding diamonds) are an increasingly important mineral product. In 1989, small miners produced about 10 tonnes of precious and semi-precious stones. Tanzania's most famous gem is tanzanite, a sapphire-coloured variety of zoisite discovered in 1967. Other important gemstones are ruby, sapphire, emerald, garnets and lesser quantities of zircon, tourmaline and other minerals.
In the late 1990's, several mining companies from Canada, United Kingdom, Australia and South Africa arrived in Tanzania, interested in gold exploration and development. From 2000, production of gold at an industrial scale is growing, especially from the Geita (AngloGold/Ashanti) and Bulyanhulu (Barrick) mines.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.