Tanzania is leading a backlash against mainly European, North American, and Australian owned mining companies who are increasingly alleged to be practicing under-invoicing in the world’s resource-extraction industries
The East African country has taken on high-profile companies including Acacia Mining and Petra Diamonds, and the governments of emerging resource-oriented economies across the world are taking note.
Tanzania’s challenges to Acacia and Petra over mineral royalties due to the government are also being closely followed by resource investors as the outcomes of these disputes could set a precedent as to how mining, oil and gas disputes are handled by emerging economies.
Earlier this year, Tanzania’s president John Magufuli banned the export of gold and copper ore produced by the country’s largest gold miner, London listed Acacia which he accused of not declaring the full value of the ore concentrate it was exporting for refining abroad. In doing so Acacia paid too little tax, he alleged.
More recently, the Tanzanian authorities seized a US$15 million consignment of diamonds belonging to another London-based mining firm, Petra. The gems were sourced at its Williamson mine and discovered en route to Antwerp for processing.
Williamson Diamonds declared the value of the diamonds was US$14.8 million while the government reckoned the actual value of the diamonds was US$29.5 million.
Both Williams and Acacia deny hiding the true value of their exports or any other wrongdoing.
Similar disputes have now emerged in Asia and South America as well, and mineral rights disputes between commercial miners and governments are erupting in countries including Indonesia, the Philippines, Mongolia and Brazil.
The issue which began with under-invoicing and tax evasion is now leading to some countries contemplating whether natural resources should still be recovered by private sector miners, or whether states should regain the control over their own mineral resources that they ceded in the post-colonial years to the private sector.
Categories: Trade Based Financial crimes News