African Barrick Gold Still In Talks With Tanzania Over Royalty Hike

London-listed African Barrick Gold PLC (ABG.LN) and the Tanzanian government are still in talks over a proposed hike in mine royalty fees to 4% from 3%, although the government Monday claimed a deal had been reached, officials said late Monday.

A person with direct knowledge of the matter said the two parties are in the process of finalizing details of the hike as well as payment of corporate taxes from the company's four gold mines in the country. "Discussions are still going on and hopefully, we will soon reach an agreement."

Tanzania's energy and minerals ministry Monday announced in an advertisement in local newspapers that it had struck a deal with Africa Barrick on higher royalties on gold exports.

ABG, a unit of Canada-based Barrick Gold Corp. (ABX), is Tanzania's largest gold producer. Tanzania is Africa's third-largest gold producer behind Ghana and South Africa.

Last year, Tanzania announced a hike in gold royalties to 4% based on the gross sale of the yellow metal, but miners opposed it, insisting that their investments are protected from abrupt changes in mining legislations and tax hikes.

The government has also been in talks with South Africa-based AngloGold Ashanti Ltd. (AU) and Australia-based Resolute Ltd. (RES.AU).

The ministry said ABG's Tuliwaka Gold Mine, AngloGold Ashanti's Geita Gold Mine and Resolute Tanzania Ltd. have started paying 30% corporate tax based on new mining legislation introduced last year.

AngloGold Ashanti and Resolute officials couldn't be reached for comments.

Tanzania is under pressure from activists and politicians to improve revenue collections from its mining sector in order to benefit from the current boom in international gold prices.

Last year, its gold output increased by 8% to hit 44 metric tons.

Gold miners have invested at least $2.92 billion in the sector since 1998, the ministry said.

-By Nicholas Bariyo, Dow Jones Newswires; 256-75-2624615 [e-mail]