MINING COMPANIES SIGNIFICANT CONTRIBUTORS TO ECONOMY, OPERATE TRANSPARENTLY.

Balozi Ami Mpungwe

MINING COMPANIES SIGNIFICANT CONTRIBUTORS TO ECONOMY, OPERATE TRANSPARENTLY

TANZANIA CHAMBER OF MINERALS AND ENERGY PRESS STATEMENT

MINING COMPANIES SIGNIFICANT CONTRIBUTORS TO ECONOMY, OPERATE TRANSPARENTLY Recently, the mining sector has seen negative media reports in relation to the way in which it operates. The Tanzania Chamber of Minerals and Energy (TCME) represents member companies involved in the mining sector, from explorers to large scale producers as well as medium and small scale miners. 

Businesses that support the mining sector also form part of the membership. This sector is a significant contributor to Tanzania’s economy and the statistics below show the tangible fiscal and social benefits that accrue to the Tanzanian economy which in turn enables the Tanzanian Government to deliver on important development projects. 

  Mining Benefits to Tanzania Key statistics:  Investment into the mining sector from 1997 - 2015: USD 4.5 billion.  Revenue generated over the same period: USD 16.5 billion  GDP contribution: 3.3% (2013), Vs Vision 2025 of 10% contribution.  43% of total exports in 2013 (BOT Annual Report 2012/13).  48.2% Gross Value Added (% of revenue retained in country) i.e utilized for local procurement, taxes, training, infrastructure, local salaries and others.  Large Scale Mining employs directly 20,000 and another 200,000 induced (1:10) Chart showing distribution of revenue generated by member companies for the period 1997-2015 The revenue generated by our members amounted to USD 16,499,378,727 for the period 1997 to 2015 Description Amount spent (US$) % of Revenue Local Procurement 4,812,639,755 29.2 Community Spend 50,813,229 0.3 Training Spend 40,946,264 0.2 Local Salaries 1,146,813,407 7.0 Infrastructure Spend 58,095,698 0.4 Royalty & Other Taxes to Govt 1,827,814,617 11.1 TOTAL 7,937,122,971 48.2 The above chart and accompanying table indicates that the Gross Value Added (GVA) in the Tanzanian economy adds up to 48.1% (that is the amount of all payments made by the companies in-country as a percentage of revenue generated by the companies. The statistics provide to a large extent the vast tangible incremental fiscal and social benefits that accrue to the Tanzanian economy. The government benefits directly from royalty payments of 4% or 5% depending on minerals produced which is charged on gross turnover (not on profit).

 Local withholding taxes, corporation tax charged at 30% on profits, employment taxes and customs duties are other sources of Government revenue as shown on the chart. In addition to direct taxation, the development of the mining industry has had a massive impact on many other sectors. As a result of mines that were constructed, rural communities have had access to power and water supplies where there were none previously, thus enabling improvement of the quality of life of rural communities that prior to the arrival of the investors, might have seemed unattainable in rural Tanzania, mobile phone networks have reached communities previously isolated from modern communication. Other benefits include improvements and rehabilitation of local schools the equipping and supply of dispensaries and encouraging local businesses to flourish; these are all standard activities on the part of the mining companies in an effort to foster a positive relationship with the community around the mine area. 

It is noteworthy to point out that that these benefits flow to the communities without cost or charge, and are not a compulsory requirement of the Government but cost the companies millions of dollars. These costs cannot be reported as tax credits, but are funding tangible contributions to national development. In addition, railways have benefited by the freighting of supplies, trucking companies have expanded, to meet the demands of the mines, hotels in Dar es Salaam, Mwanza, Geita etc. have seen a significant increase in occupancy rates due to the mining employees and international visitors. Even tourism has reaped a benefit by the many mining related people visiting Tanzania’s world class national parks. New roads have been constructed or existing roads upgraded, not at the cost of the taxpayer, but the mining companies themselves.

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