Tanzania Daily News (Dar es Salaam)

22 January 2013

Tanzania: Small-Scale Miners' Wealth Ends Up in Few Pockets

THE significance of the mining sector to the economy need not be overstated despite the massive revenues generated from the activities of the small and medium miners, which goes into the pockets of few individuals.

Mining sector's contribution to the economy is increasingly becoming vital when taken in its totality due to the engagement of most mining firms in various corporate social responsibilities (CSRs) activities in the society. Small and medium mining activities create and provide employment opportunities to a large number of Tanzanians compared to capital intensive large scale mining which rely heavily on modern technology and few experts.

While large scale mining contributes enormously through royalty, corporate tax and other levies, small scale mining provides jobs to majority of the people, but disbursing little to the government in terms of various taxes and duties. According to the Tanzania Minerals Audit Agency (TMAA) Chief Executive Officer, Mr Paul Masanja, large scale mining have well coordinated systems of production which is transparent for both parties, the government and investors get accurate information.

"Mining activities are becoming significant to the whole economy as such firms go out and invest in various social projects geared at improving people's living standards," he added. The situation is different with the small and medium scale mining which has been leading in mineral smuggling, for which the TMAA boss said the malpractice is one of the challenges for the agency to achieve its targets.

The rampant illegal exports of minerals through 'panya' routes are reportedly subjecting the country to substantial loss of revenues through uncollected taxes. Surveys carried by some experts show that small and medium gold minors produce around 20 tonnes annually, but the government records indicate only 1 tonne. Also about 4 kg of tanzanite is being mined in a day but only 1kg goes to the government records, implying that between 60 to 75 per cent of minerals go undocumented.

"There is a wide network of illegal mining activities that calls upon serious attention and cooperation of all stakeholders in the business including the TMAA, Immigration, Police, Tanzania Revenue Authority (TRA) and airport security authorities," at the workshop on the mining export-import regulations. He said there was still little cooperation from the stakeholders in curbing the illegal mineral business and with the TMAA alone cannot manage to control the malpractice.

Mr Masanja also mentioned low public awareness on varied mineral regulations hindering them from identifying and reporting malpractices in the business which could help in unearthing the culprits. To address the problem of mineral smuggling, Mr Masanja said TMAA has established special desks at Julius Nyerere International Airport, Kilimanjaro International Airport and Mwanza Airport to inspect and ensure all export import procedures were properly followed.

For example, recently an individual was nabbed at KIA with minerals worth 16,000 US dollars without having export permits. With regards to large scale mining, Mr Masanja said the government through TMAA has put in place compact systems that has facilitated in tracing the whole process from the mining areas to the market places. For example, Geita Gold Mine (GGM) has paid to the government more than 270bn/- as corporate tax and in the quarter ending in 2012, the company disbursed 60bn/-.

Tulawaka gold mine has paid to the government more than 72bn/- in corporate tax. TMAA is tasked with monitoring and auditing quality and quantity of minerals produced and exported by large, medium and small scale miners; to determine revenue generated to facilitate collection of payable royalty. Presenting a paper on the mineral export-import procedures, Mr Julius Moshi from TMAA said the Mining Act 2010, section 6 (4) states that an individual nabbed conducting illegal mining business is fined 10m/- or three years jail while a company is penalised 50m/-.

In the meantime, TMAA asked the government officials at the country's exit and entry points to acquaint themselves with the mining laws to maximally control the illegal business of minerals. The TMAA Director for Minerals Valuation and Laboratory Services, Engineer Dominic Rwekaza, said good understanding of the 2010 Mining Act and its regulations would enable officials manning the country borders to confidently identify and arrest culprits of the illegal mining business.

"It's high time we worked jointly with all stakeholders in the mining sector to save the nation from massive revenues loss," he said at the closure of a two-day seminar that brought together officials from TMAA, Customs, Police and airport security. Collaboration among various stakeholders would make easy the TMAA task of checking mineral smuggling and royalty evasion.

The TMAA Manager for Valuation, Mr George Kaseza, said the auditing carried by the agency is not limited to the period for which it was established, but it goes back to the period the audit started operations. TMAA, in collaboration with the Tanzania Revenues Authority (TRA) customs officials, for instance, has discovered that the TanzaniteOne evaded paying royalty since 2004 to 2009 worth 1.5bn/-.

In the meantime, Mr Kaseza said the agency will in the near future establish a database to make available the mining licences and other export or import permits with the view of controlling forging of the certificates and easing the officials' task of tracing the origin of the mineral cargos. Lack of modern equipment and manpower at various entry or exit points remain to be among the challenges facing TMAA.

Mr Kaseza said swift measures were in the pipeline to address most of the challenges. He cited scanners used to detect minerals in luggage at the airports, saying some minerals are not detectable by the gadgets, the loophole that some dishonesty smugglers use to evade government taxes. He said emerald or tanzanite gemstones are among the expensive metals in the world but could not be detected by the scanners.

It is high time for all stakeholders in the mining sector to team up to ensure the incomes generated and other benefits go to the right channel to facilitate the government efforts to alleviate poverty from the society.

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