 By Elisha Magolanga
The Citizen Correspondent
Dar es Salaam. Nzega District is demanding Sh4 billion in local government levy from a gold mine closing down this year.
Council officials and the area MP maintain that Resolute Mining Limited, which owns the Golden Pride Gold Mine, should pay up or face unspecified action.
The mine was established in 1997 and has produced 2 million ounces of gold worth about $3.3 billion (Sh5.2 trillion) in almost 14 years of operations.
Nzega District Council chairperson Patrick Mbozu told a public meeting in Nzega that Resolute, which operated the first modern commercial gold mine in the country, had only paid Sh2.34 billion out of over Sh6.3 billion it owed the council in levy arrears.
He said about Sh4 billion was outstanding, adding that the money was meant for improvement of social services in the district’s rural areas.
A demonstration has been organised for next Monday in Lusu Ward, near the mine, to coincide with the official opening of Aziz Ali Secondary School, built by Resolute Limited for the local community. President Kikwete is expected to be the chief guest at the function.
Nzega MP Hamisi Kigwangalla last week told The Citizen that Nzega citizens wanted to relay their message through peaceful demonstrations before President Kikwete.
Mining companies are supposed to pay a service levy equivalent to 0.3 per cent of their annual turnover to local governments in areas they operate, according to the Finance Act of 1987.
For companies to pay the levy, councils must enact bylaws to ratify the Finance Act, but the law says in places where the councils have not yet ratified the Finance Act companies are supposed to pay a local levy of $200,000 (Sh320 million) annually.
Nzega District Council enacted bylaws in 2004, meaning that Resolute was only paying about $200,000 for seven years from 1997 to 2004.
The company only started paying 0.3 per cent in 2005, but the council is demanding that the levy be backdated to the time the mine was opened.
According to the council’s calculations, Sh6.3 billion is the outstanding service levy, but the company has agreed to pay Sh2.4 billion after lengthy negotiations.
Efforts to reach the Resolute management proved futile, but a senior official who spoke to The Citizen on condition of anonymity because he was not the company’s spokesperson, said the firm maintained that the $200,000 it paid before 2005 was enough.
“Resolute mine has paid a total of $2.4 million to the local government since 1998. The only debt I know of is the local service levy that has not been paid since July 2012,” he said.
“The 1987 Finance Act states that companies should pay 0.3 percent of the turnover as service levy to the investment area. In order for the law to be implemented, the district council must activate it by approving it as a bylaw.”
He said Nzega District Council had only itself to blame for dragging its feet until October 2005 when it passed the bylaws, adding that that was when the 0.3 per cent rule came into force. However, Resolute had paid $200,000 every year from 1998 to 2004.
He said after three meetings attended by the Energy and Minerals Deputy Minister Stephen Masele, Nzega District Council, Resolute and the Tanzania Minerals Audit Agency (TMAA) it was agreed that the company should pay the 0.3 service levy from 2005 when the council ratified the law.
But Dr Kigwangalla said the company must pay the arrears before it closed down.
“Justice must be fought for. They agreed to pay Sh2.4 billion because we forced them to. They pay the outstanding Sh4 billion,” he said.
For its part, TMAA said Resolute had paid Sh129 billion in taxes and royalties in the 14 years of the mine’s operations.
Mr Julius Moshi, TMAA manager of Planning and Research Development, told The Citizen that Resolute spent Sh5.1 billion on various Corporate Social Responsibility (CSR) projects in areas surrounding the mine from 2000 to June 2012.
The Golden Pride Gold Mine is an open pit mine owned by the Australian miner Resolute. It was the first modern commercial gold mining project developed in Tanzania since independence. Its construction was completed in November 1998 at the cost of $48 million. Located in Nzega District, Tabora Region, the mine was opened on February 7, 1999 by the then President of the United Republic of Tanzania, Mr Benjamin Mkapa. |
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