Mineral Auditing in Tanzania at a Glance

Mineral Auditing in Tanzania at a Glance

Mineral auditing in Tanzania at a glance

The Government of Tanzania, in creating an enabling environment for foreign and local investments, formulated the Mineral Policy of 1997; enacted the Mining Act of 1998 and major reforms in the mining fiscal regime which contained generous tax incentives aimed at attracting both local and foreign investorsin the mining sector.

The measures resulted into increased large scale exploration and mining activities, including the establishment of 7 large scale gold mines (1998 – 2009).

However, as of 2003 the Government could not effectively realize the expected benefits due to inadequate expertise and ineffective monitoring of mining operations

In order to address this situation, the Government, among other measures, engaged M/S Alex Stewart (Assayers) Government Business Corporation (ASAGBC) to undertake gold auditing of the major gold mines in the country from June, 2003 to August, 2007.

Afterwards, on 15th August 2007, the Government approved the formation of Gold Audit Program (GAP) under the Ministry of Energy and Minerals to take over the activities previously undertaken by ASAGBC. -

As a result of successful operations by GAP, the Government:

  1. Collected Corporate tax from Geita Gold Mining Limited amounting to TZS 2.1 billion, which was paid to the Government in November, 2008.
  2. Cut monthly operations cost by 75% of the costs previously paid to ASAGBC;
  3. Continued building and strengthening capacity by recruiting and training Tanzanian professionals;
  4. Recovered uncollected royalties following reconciliation between GAP and respective mines;
  5. Acquired accurate information and statistics of minerals produced and exported by major gold mines; and
  6. Prevented erroneous declarations of capital and operating expenditure by major gold mining companies, whether by mistake or by willful act.

As a result of GAP’s achievements, the Government established the Tanzania Minerals Audit Agency (TMAA). The Agency took over the functions previously undertaken byGold Audit Program(GAP) with increased scope to cover large, medium and small scale mines for all minerals produced so as to maximize the benefits from the mining industry, thereby enhancing socio-economic development.

The Tanzania Minerals Audit Agency (TMAA) is a semi-autonomous institution established in 2009 under the Executive Agencies Act, Cap. 245.

TMAA is the successor of the Minerals Auditing Section- GAP under the Ministry of Energy and Minerals which was responsible for undertaking gold auditing of the major gold mines in the Country.

The roles and functions of the Agency are:

  1. To monitor and audit 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;
  2. To auditrevenue generated, capital investment and operating expenditure of the large and medium scale mines for the purpose of gathering taxable information and providing the same to the Tanzania Revenue Authority (TRA) and other relevant authorities;
  3. To monitor and audit environmental management, environmental budget and expenditure for progressive rehabilitation and mine closure;
  1. To collect, analyze, interpret and disseminate minerals production and exports data for projecting Government revenue, planning purposes and decision making in the administration of the mining industry;
  2. To counteract minerals smuggling and minerals royalty evasion in collaboration with relevant Government authorities;
  3. To assess values of minerals produced by large, medium and small scale miners to facilitate collection of payable royalty;
  4. To advise the Government on all matters relating to the administration of the mineral sector with main focus on monitoring and auditing of mining operations to maximize Government revenue;
  5. To examine and monitor implementation of feasibility reports; mining programs and plans; annual mining performance reports; and environmental management plans and reports of mining companies;
  6. To produce minerals indicative prices with reference to prevailing local and international markets for the purpose of assessment and valuation of minerals; and
  7. To provide information and awareness on TMAA’s activities to the general public.

TMAA has analyzed the benefits accrued from the major gold mines since the agency establishment in 2009 to year 2014. The analysis has revealed the following benefits from the major gold mines operating in Tanzania as a result of TMAA audits:

Since its establishment (2009 to 2014), TMAA has recorded a remarkable achievements as a result of effective monitoring and auditing of mining operations in Tanzania. The achievements recorded includes;

  • Corporate Income Tax (CIT) paid for the period from year 2009 to August September2015 amounted to USD 406m USD 419m. No CIT was paid before TMAA establishment.
  • Local Service Levy paid to host district councils based on TMAA inputs amount to USD 5.4m.
  • Royalties collected by the Government as a result of TMAA audit from seven (7) mojar Gold being Geita, Golden Pride, Bulyanhulu, Tulawaka, North Mara, Buzwagi and New Luika Gold mines mines for the period of 2009 through june 2015 amounts to USD 350 million;
  • Additional royalty paid from strategic audit conducted on Small and Medium Scale Miners facilitated collection of USD 10.2m as royalty for the period from June 2011 to August 2015.
  • Since establishment of TMAA’s airport desks in July 2012, various minerals worth (USD 10mil.) have been confiscated in combating attempts of illegalmineral smuggling and royalty evasion.
  • Enhanced trust by public on the way the Government administers the sector.
  • Enhanced environmental management and rehabilitation in the mining areas
  • Enhanced reliability of data (upfront data capturing).
  • Voluntary compliance enhanced e.g. intermediate mineral product value declaration by cement manufacturing entities.
  • Transfer of technology to Tanzanian nationals.

As you can see from the benefits accrued above, the agency play a vital role in maximizing Government revenues from mineral sector though monitoring and auditing mining operations in the country and by ensuring sound environmental management in mining areas, remember that mining is haunted with negative image from the public mainly in two aspects: less benefit than expected and environmental degradation,TMAA work doesaddress those challenges. TMAA also help the mining companies in one way or another to obtain a social license to operate, i.e. to be accepted by the public.

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