Page last updated at 18:05 GMT, Wednesday, 25 March 2009

Africa 'loses out on mining cash'

South Africa 100 rand bank notes
The report says the lost revenues could have been used for development

Mineral-rich African states have been deprived of huge sums of royalties and taxes by mining firms, a report says.

The report, by prominent development charities, blames a lack of legislative oversight and excessively generous tax concessions agreed with the firms.

It says some mining companies have also avoided paying tax through secret contracts with African governments.

The study covers South Africa, Sierra Leone, Ghana, the Democratic Republic of Congo, Malawi, Tanzania and Zambia.

Commissioned by development charities including Christian Aid and ActionAid, the Breaking the Curse report calls for reform of the institutional framework that negotiates mining concessions and monitors the royalties paid.

African countries have been encouraged by agencies such as the World Bank to offer more generous terms to attract mining investment
Breaking the Curse report

Even in the boom times, African nations failed to profit as much as they should have done from natural resources thanks to inadequate tax rules and lack of ability to enforce the rules that did apply, the report says.

Ghana, a top African gold producer, is losing $68m (£46.7m) annually because it is receiving low royalties, the report's authors estimate.

They believe Tanzania, the continent's third largest producer of gold, could be losing $30m (£20.6m) a year in potential revenues.

And low royalty rates could be costing South Africa, the continent's biggest gold producer, up to $359m (£246m) a year, the report says.


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However, in South Africa, where the government has decided to defer royalty payments this year to help secure jobs in the mining sector, finance minister Trevor Manuel questioned the researchers' figures.

Mr Manuel said his country would lose $195m (£133.9m) in deferred royalties this year.

The report says African countries have been encouraged by agencies such as the World Bank to offer more generous terms to attract mining investment.

Essentially, the BBC's business reporter Mark Gregory says, it argues the costs of this approach have outweighed the benefits.

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Peoples Weekly World Mining firms 'cheat Africa out of millions' - 28 hrs ago
Globe and Mail Report says poor countries not cashing in on mining - 33 hrs ago
Daily Nation Activists demand Africa mining tax reforms - 49 hrs ago
Xinhua News Agency Africa trading blocs plan to launch major infrastructure initiative - 57 hrs ago
Mining Weekly AngloGold Ashanti sees Tanzania gold output up in 2009 - 24 Mar 2009

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