Monday, May 3, 2010

Tanzania Follows Australia, Raises Gold Royalty Payments

According to Bloomberg, the Tanzanian government is set to raise the gold-royalty payments from 3% to 4%,

The large multinational miners (Barrick, Anglo Gold, etc) that mine in Tanzania say the law won't affect them, because of the existing agreement with the government. Uh huh. The government can change the existing agreement any time it wants, I am afraid, particularly the cash-starved government.

The law also stipulates that Tanzanian citizens should own more than 50% of shares of any gemstone-mining companies. Tanzania is the only place in the world that has a deposit strip of Tanzanite, 1000 times rarer than diamonds.

The Tanzanian Chamber of Minerals and Energy is right in fearing the law will significantly reduce the competitiveness of Tanzanian mining industry.

As this blog posted yesterday, Australia wants to introduce 40% tax on mining profits.

So who will be the next to join the "Let's kill the goose that lays golden eggs" club?

(The United States, is my vote.)

The precious metal mining shares (gold, silver, platinum, palladium) as well as base metal mining shares are down today, some of them significantly.


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