1 January 2013

Tanzania May Export Coal in 2013, Says Report

MINING projections for the first quarter of 2013 show that Tanzania could be in a position to export coal, most likely to India and China.

The Tanzania Mining Report however cautions that the country's mining sector may become less attractive to investors given the push to tighten regulation and raise taxes.

"While other countries like Ghana, Peru and South Africa are also seeking to raise taxes on mining companies, Tanzania is going significantly further with plans to introduce an Australia style 35 per cent tax on mining companies' profits and raising royalties," notes the report.

It adds that these tax rise, combined with lack of adequate infrastructure and the absence of huge mineral deposits compared with many of its neighbours could push investors elsewhere on the continent.

Reacting to the report, University of Dar es Salaam economist Dr Lenny Kasoga said Tanzanian mining industry is relatively small in terms of value, but its importance is highlighted by the fact that mining earns a significant share of the country's export revenues.

The Report notes that the mining sector contributes approximately three per cent to annual GDP, but the government wishes to expand this to 10 per cent by 2025. Major foreign investors in Tanzanian mining include African Barrick Gold and AngloGold Ashanti.

Tanzania is home to significant deposits of coal, cobalt, copper, diamonds, gold, nickel, silver and uranium. The country has long been a significant producer of gold (currently Africa's fourth largest producer) and diamonds.

However, in the coming years, notes the report, there is expectation for coal, nickel and uranium production to become key sub-sectors of Tanzania's mining sector. "Indeed, we have long held the view that coal should become one of the fastest-growing areas in Tanzania over the coming years, as the country looks to coal-fired power stations to offset an energy shortage that is holding back its development," it notes.

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