AngloGold Ashanti’s response to a report alleging negative social impacts of the tax practices used by the company's Tanzanian operations

12 November 2008

The Business & Human Rights Resource Centre invited AngloGold Ashanti to respond to allegations of negative social impacts of the tax practices used by the company's Tanzanian operations. The allegations are available here:

-“A Golden Opportunity? How Tanzania is failing to benefit from gold mining” by Mark Curtis & Tundu Lissu, October 2008:

AngloGold Ashantisent the following statement:

Response to Report “A Golden Opportunity?” on Business and Human Rights Centre Website

AngloGold Ashanti would like to note a number of points in relation to the report “A Golden Opportunity”, to be published on the Business and Human Rights Centre website.

On a general level, it needs to be understood that the investment required to bring a mine such as Geita into production is significant, particularly in an environment where mining is not an established are of economic activity and where investment needs to include the development of local infrastructure, for example housing, road or rail, to serve both a mine and the surrounding community.

It is also the case that mining companies are dependent on fluctuating commodity prices, which regulate both revenue as well as the cost of major input requirements such as steel, fuel and other consumables.

It is therefore essential for mining companies, in order to be able to undertake long-term investments in any country, to be able to benefit from stable tax regimes, such that investment is made in a way which can maximize the value of the mineral resource to the economy concerned. Without the tax stability regimes referred to in the report, it would be impossible for investment on the scale required in the gold mining sector to take place.

Governments can and do take equity stakes in companies investing in the resource industries in their economies. It is misleading, however, to suggest that this is the optimal way for Governments to derive benefits from resource extraction. As shareholders in a resource company, Governments are exposed to the fluctuations in revenue and cost referred to above. It is also difficult for them to retain a neutral stance when regulating the sector, whether dealing with issues such as mine safety, environmental legislation. Direct taxation, such as through royalties and corporate tax, can therefore be a more efficient way for Governments to benefit from natural resources.

AngloGold Ashanti is a member of the Extractive Industries Transparency Initiative and is committed to transparency in relation to resource industry revenues. It is also committed to serving communities in which it operates by ensuring that they are better off for the company having been there.

The company would like to note the following in relation to its operations in Tanzania:

  • AngloGold Ashanti employs some 3,226 people in Tanzania;
  • Wage payments of US$25m benefited the economy directly in 2007;
  • Total payments to Government amounted to $47m in 2007, including taxes and royalties;
  • Some $2m was spent in 2007 on training and development of the company’s workforce in Tanzania and approximately $260,000 on programmes designed to benefit communities in the area around the mine.