February 4, 2013 / 2:31 PM / 6 years ago

Tanzania does not rule out windfall mine taxes

CAPE TOWN, Feb 4 (Reuters) - Tanzania’s minerals minister said on Monday the government could impose windfall taxes on mining companies if they reap huge profits from the commodity cycle.

Tanzania is Africa’s fourth-biggest gold producer and the mining industry has been complaining since the government passed legislation over two years ago that included a rise in royalties on gold exports to 4 percent of gross value from 3 percent of “netback” value.

Minister Sospeter Muhongo said the tax regime was not set in stone and the government could offer relief to companies when times were tough.

“If they are making losses, will they keep quiet? When they are going to make huge losses they are going to approach the government,” Muhongo told Reuters on the sidelines of a African mining conference in Cape Town.

“If they are going to make huge profits, we will also approach them,” he said.

Asked if this meant windfall taxes could be introduced, he replied “yes”.

Many African governments say they need to extract more revenue from their mining and oil industries to spread the benefits of resource wealth more widely.

But some investors are concerned about the rise of so-called “resource nationalism”, especially since other industry costs have been on the rise in recent years.

Major gold mining companies in Tanzania include African Barrick Gold Plc, which has four gold-producing mines, AngloGold Ashanti Ltd and Resolute Mining Ltd.

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