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Tanzania says Russia's ARMZ owes $206m in taxes
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23rd May 2013
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DODOMA  - Tanzania is demanding almost $206-million in taxes from Russian state uranium company JSC Atomredmetzoloto (ARMZ), which has won a licence to build the east African country's first uranium mine, the energy minister said on Thursday.

Russia's ARMZ is the mining arm of Russia's nuclear regulator, Rosatom, which also built nuclear reactors.

Tanzania's tax claim related to the Mkuju River project in southern Tanzania, which was operated by Toronto-listed Uranium One, but owned by ARMZ, the Canadian uranium producer's majority shareholder.

"The Mkuju project ...was sold in December 2010 to ARMZ of Russia after acquiring shares from the parent company, Mantra Resources of Australia," Energy and Minerals Minister Sospeter Muhongo said in a newspaper advertisement of his ministry's 2013/14 budget proposals, which were tabled in parliament on Wednesday.

"Following this deal ... the Tanzania Revenue Authority is claiming $205.80-million, of which $196-million was supposed to have been paid as capital gains tax and $9.8-million as stamp duty."

Muhongo said the company had disputed the tax claim and the matter was now awaiting a court ruling.

Gaudiosus Ishengoma, a lawyer at FB Attorneys which was representing ARMZ in the tax dispute, said the Russian company had successfully challenged the government's tax demands in court. He said the case was now before the Tax Appeals Tribunal of Tanzania.

Uranium One in 2011 revised upwards its mineral resource estimate for the Mkuju project to about 45 900 tonnes of uranium.

The project was granted a mining licence by the Tanzanian government in April.

The minister also said the government planned to conclude a deal to buy a 50% stake in the Tanzanian unit of London-listed Richland Resources by July 30.

The Aim-listed miner, which held the licence to the largest of four mining blocks in the world's only tanzanite-producing area near Mount Kilimanjaro, returned to profitability in 2010 after two years of losses.

Tanzania's Mining Act of 2010 stipulated that Tanzanians retain at least 50% control or shareholding in all gemstone mining operations.

TanzaniteOne said a State-run mining company, STAMICO, was not expected to pay cash but instead use part of the future dividends from mining operations to pay for the acquisition.

"The value of the 50% stake to be acquired by STAMICO shall be determined by a valuation that would be determined by an independent valuer," TanzaniteOne Chairman Ami Mpungwe told Reuters.

Muhongo said Tanzania's mineral exports surged 16.3% t in 2012 to $2.3-billion, buoyed by higher gold prices. Gold accounted for 94% of that, he said.

The minister also said the government would enter into a joint venture with Australian firm Manjaro Resources to revive an old gold mine in northwestern Tanzania, which had tailings worth an estimated $70-million.

Edited by: Reuters

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