Miner rocked by Tanzania tax
THE Tanzanian government has approved a five-year development plan that includes a proposal for a super-profit tax on mining companies.
Mustafa Mkulo, the Tanzanian minister of finance, told City A.M.: “The proposal is in the white paper, however the tax has not been included in my tax measures for the next financial year.”
Mkulo, who announced Tanzania’s annual budget last week, could not confirm when the tax would be implemented or whether he had already discussed the proposed levy with existing mining operations.
The government said earlier this week that it will negotiate with existing companies about the super-tax, which would help finance its $27bn (£16.6bn) development plan.
African Barrick Gold, the biggest gold producer in Tanzania, experienced a rocky day in FTSE trading yesterday, finishing up 0.28 per cent, despite the threat of fresh taxes.
“Any tax levy could spell more bad news for African Barrick Gold, who downgraded its production twice last year, disappointing investors,” said Dimitry Kalachev, an analyst at Cannacord Genuity.
The group reported last week that it has not been contacted by the Tanzanian Chamber of Minerals and Energy with regards to the super tax and that it was unlikely that the company would be impacted by the levy.
“Any super tax that would be imposed would not impact our operations because we are bound by Mineral Development Agreements with the government that require that any change in that status would have to be agreed upon by ABG itself,” a spokesperson for the gold miner said.