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Tanzania demands US$1.1M in outstanding royalties from Tancoal Energy

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Tanzania demands US$1.1M in outstanding royalties from Tancoal Energy

Tanzania's ministry of minerals requested a royalty payment of US$1.1 million from Tancoal Energy Ltd. and threatened not to reissue permits for coal transportation if the company does not comply.

Tancoal Energy operates the Tancoal mine and is a joint venture owned by Intra Energy Corp. Ltd. and National Development Corp. of Tanzania on a 70/30 basis.

The company received a letter of demand which requested payment of about US$760,000 in outstanding royalties for the period of Aug. 2011 to June 2014 as well as a penalty of just under US$380,000.

Tancoal Energy said Aug. 21 that the letter stated that permits will not be issued to allow coal transportation to customers after Aug. 26 if the payment is not made.

An initial follow-up with the ministry revealed that the demand is based on cost estimates linked to coal transportation once the goods leave Tancoal's Kitai sales point, the company stated, noting it has yet to receive a detailed written breakdown of the estimates.

Tancoal flagged its disagreement with the move and is in contact with the minister's office "to review the interpretation of the mining law." It also noted that it requested "clarification and time for the matter to be duly considered before any action is taken by the ministry."

Tancoal mines its coal at the Ngaka mine but processes it at Kitai, from where it is directly sold to customers.