Tanzania’s Tougher Mining Laws Rattle Companies – by Nicholas Bariyo and Jacquie McNish (Wall Street Journal – August 3, 2017)


Barrick is meeting with government to discuss $190 billion bill for back taxes and penalties

International miners that flocked to Tanzania for its low taxes and friendly laws are running up against a populist president eager to gain a greater share of mining revenue.

Since his election two years ago, President John Magufuli, nicknamed “the bulldozer” for his forceful leadership style, has taken a series of actions he says are aimed at redistributing mining revenue to Tanzanians. The moves range from compelling miners to list their stakes in local stock exchanges and demanding higher taxes and royalties to threatening to tear up entire extraction contracts.

“I will not hesitate to close down all the mines if companies don’t pay what they owe us,” Mr. Magufuli told a cheering crowd in Tanzania’s north western mining region last week. “I have launched an economic war.”

Tanzania’s aggressive steps have rattled investors and led to selling of stock of the most affected companies such as Acacia Mining PLC. Some companies have ceased or scaled back operations including Australia’s gold and lithium miner Liontown Resources , which has been operating two gold-exploration projects, and has pulled all of its staff out of Tanzania, while Russia’s Rosatom State Atomic Energy Corp. has paused its $1.2 billion uranium project.

The legislative changes also mark a sea change in a country that has been a darling of foreign miners since the East African nation dismantled its socialist economic controls in the 1990s.

The fourth-biggest gold producer in Africa, Tanzania also has reserves of copper, nickel, uranium and natural gas. Tanzania aims to double mining contribution to its gross domestic product to 10% by 2025. The government says the changes are necessary to stimulate processing of commodities within Tanzania, collect more revenues and create more jobs.

For the rest of this article: https://www.wsj.com/articles/tanzanias-tougher-mining-laws-rattles-companies-1501666200?mod=e2fb