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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (34772)	3/27/2009 2:49:50 PM
From: LoneClone	Read Replies (1) \| Respond to of 194042

Mining tax breaks costing African countries Sapa-AP Posted: Wed, 25 Mar 2009 miningmx.com [miningmx.com] -- POOR African countries that are rich in minerals lose tens of millions of dollars each year because mining companies get large tax breaks and don't pay high enough royalties to the governments, according to a report released Wednesday. The report - which covered Congo, Ghana, Malawi, Sierra Leone, South Africa, Tanzania and Zambia - said mining contracts often are negotiated in secret or without input from lawmakers. It said parliaments should play a more active role in approving and monitoring contracts. Governments and the mining companies also should make the details of their financial transactions public, including the breakdown of how much companies remit in royalties and taxes to each country in which they operate, it said. "Governments are borrowing to alcoholic proportions to meet the basic needs of people. And this borrowing can be avoided if the capacity to collect revenue and the revenue that is collected is made equitable," said Brian Kagoro, Pan-African policy manager for ActionAid, one of the non-governmental organizations behind Wednesday's report. Royalties are the percentage of the production or turnover that the company pays to the country. The percentages and the way they are calculated differ from country to country. Ghana, a top African gold producer, is losing $68m a year in revenue because it is receiving low royalties, the report found. Tanzania, the continent's third largest producer of gold, is losing $30m a year in potential revenues. Tanzanian Energy and Minerals Minister William Ngeleja declined to comment, saying he had not seen the report. The report also estimated that low royalty rates could cost South Africa, the continent's biggest gold producer, up to $359m a year in revenue. South Africa currently does not receive royalties but the report based its calculations on the rates that the government is proposing in draft legislation, which has been in the works for six years. South African Finance Minister Trevor Manuel said the country will lose $195m in deferred royalties this year. He said the government had decided not to charge any royalties this year because the current economic situation would lead to greater job losses. His estimate of lost revenue is lower than the report's because negotiations for royalties are ongoing in South Africa and the two used different figures for their calculations. Frans Baleni, general secretary of the National Union of Mineworkers, South Africa's largest mining union, said the union understood the reasoning but wanted it to be conditional on saving jobs. He also said that the granting of mining licenses and contracts is a relatively transparent process in South Africa and workers have a say.