Barrick to pay more in service levy

Minister for Energy and Minerals, Prof Sospeter Muhongo 

By Mkinga Mkinga, The Citizen Reporter

In Summary

The giant mining company pays nearly Sh1 billion annually to Tarime, Kahama and Bulyanhulu district councils. Each of the local authorities currently receive $200,000.

Dar es Salaam. Three district councils will now share about Sh3.5 billion or more every year in service levy paid by Africa Barrick Gold, it has emerged.

The giant mining company pays nearly Sh1 billion annually to Tarime, Kahama and Bulyanhulu district councils. Each of the local authorities currently receive $200,000.

The new development was revealed by the minister for Energy and Minerals, Prof Sospeter Muhongo, in an email communication. The minister said ABG will now pay a service levy of 0.3 per cent of its annual turnover annually to every district where it runs a gold mine.

Reached for comment, Prof Muhongo declined questions from The Citizen to elaborate the new development that comes hot on the heels of another agreement, last week, with Geita Gold Mine to start paying 4 per cent royalty to the government from the current 3 per cent.

ABG operates North Mara gold mine in Tarime, Bulyanhulu gold mine in Msalala and Buzwagi gold mine in Kahama.

Speaking to The Citizen yesterday, ABG first vice president, Mr Deo Mwanyika, admitted that his company will be paying the higher levies to three district councils starting this financial year. He said this was a result of an agreement with the ministry.

“But let me say that as we raise the levy, we will also demand that the money be spent well and for the intended purpose and not holding seminars and study tours,” said Mr Mwanyika.

Kigoma North MP Zitto Kabwe, who was in 2007 a member of the Judge Mark Bomani Mining Review Commission, said ABG has done what was recommended by the team. He said the remaining challenge was to make sure that the company also procured services and some products locally.

 “I welcome the move as it is the implementation of the recommendations of the Bomani Commission. Our work would have been productive if all mining companies complied with the new mining Act,” Mr Kabwe said.

Section 8(4) of the new Act requires that government royalties be calculated on the gross value of minerals, rather than the present method of calculation which refers to the net value.

Meanwhile, Prof Muhongo said talks on the 30 per cent corporate tax were in progress. He also revealed ABG would be moving its headquarters from Johannesburg to Dar es Salaam.

Mr Mwanyika confirmed the relocation, which he said was done to reduce operational costs. He said 170 of the 200 workers in the South African office have been laid off

ABG first vice president Deo Mwanyika says: “The Johannesburg office will remain our sub office but major roles will be dealt with here in Dar es Salaam. It’s in our strategy to improve operations, including using more local expertise as opposed to foreign professionals where appropriate.”

Mr Mwanyika noted ABG has cut its expatriates by half, from nearly 500 to about 250 over the last five year. He said Buzwagi gold mine is being managed by a Tanzanian expert, Mr Filbert Rweyemamu.