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PUBLIC RECORD OFFICE
Reference :-
munimmt mC.O. 885
15 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
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That copies of this letter, and of the subsequent correspondence between the Company and the Colonial Office, together with copies of the Treasury Minute of the 30th of June, 1899, and of the letters which passed between the Governor of the Royal Niger Company and the Secretary to the Treasury dated the 29th of June, and the 1st of July, 1899, respectively would be found printed in the enclosed paper, African (West) No. 701.
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That it would be seen that the Niger Company held that the word "royalty was used, in the Minute and letters which constituted the agreement between the Government and the Royal Niger Company, to cover anything which the Government might make out of the mining rights transferred by the Company to the Crown, and that the Company were entitled to one-half of both the duties on profits, and the royalty or percentage on the gross value of minerals gotten which were payable under section 19 of the Minerals Proclamation, and also to one-half of the fees received by the Government for licences to prospect.
That on the other hand it would be seen that the Government considered that in the Treasury Minute the word "royalty" was used to denote a proportion of the minerals actually worked and exported in a specified way, and that, while it was extended by the letter of the 1st of July, 1899, to include any profit made by sale or by the issue of licences in connection with the working of minerals, it did not include a tax or duty on profits; and, consequently that while the Government was bound to pay to the Company one-half of the proceeds of the royalty or percentage on the gross value of minerals gotten which would be levied under section 19 of the Minerals Pro- clamation, it was not bound to share with the Company either the proceeds of specific taxation on the mining industry, such as the tax on profits, or the profit made by the issue of licences to prospect, since this profit was not made in connexion with the working of minerals. That a further question arose with regard to the meaning of the word "profit" in this connexion.
That he was to request us to take his letter and the accompanying papers into our consideration and to report:-
(1.) Whether the term "royalty" in the 9th and 10th paragraphs of the Treasury Minute of the 30th of June, 1899, includes a tax on the profits of the persons work. ing the minerals or signifies only a percentage on the gross value of the minerals gotten and exported as therein mentioned?
(2.) Whether the profit made by the Government from "licences to prospect granted under the Minerals Proclamation, 1902, is a profit made "in connection with working of minerals" within the meaning of the letter of the 1st July, 1899, ad- dressed to the Governor of the Royal Niger Company?
(3.) Whether the Government is entitled, before sharing with the Company the proceeds of royalties or of sales or of the issue of licences to deduct therefrom any charges and expenses incurred by the Government for protection or otherwise on behalf of the mines and the persons working the minerals!
(4.) Generally, what, upon the true construction of the Treasury Minute of the 30th of June, 1899, and letter of the 1st July, 1899, are the respective rights there- under of the Government and the Royal Niger Company as regards minerals in Northern Nigeria?
We have taken the matter into our consideration, and, in obedience to your commands, have the honour to
Report-
That (1) in our opinion the term "Royalty" used in the 9th and 10th paragraphs of the Treasury Minute of the 30th June, 1899, signifies a percentage on the gross value of the minerals gotten and exported as provided by the Minute. But although we do not think that it could be successfully contended that the term in itself includes any portion of a tax upon the profits of the persons working the minerals, we think that the terms of the Treasury Minute involve an obligation on the part of the Govern ment not to impose any such tax when its immediate effect would be a reduction in the amount of the royalties that could be obtained if no such tax was imposed.
It follows that if such a tax on profits is imposed the Company would be entitled to a share in it although technically their claim would be based on the breach of the implied contract not to do anything which would either prevent royalties being charged or would diminish the amount of royalties which, the industry would bear.
We think that this view is carried still further by the letter of the Treasury dated 1st July, 1899, which undertook that the word "royalty" should be held to
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cover any profit made by the Government in connection with the working of minerals as we do not think that the generality of these words is cut down by the reference to sale and the issue of licences which were the matters immediately under discussion. But we think that this letter merely gives effect to the implied obligation which already existed.
(2.) We are of opinion that fees from "licences to prospect" are profits made "in connection with the working of minerals" within the meaning of the letter of the 1st July, 1899.
(3.) We think not, as no such deduction is mentioned or indicated. Generally. We have nothing to add to the general observations which we have made in our answer to the first question.
The Right Honourable
Joseph Chamberlain, M.P.,
&c.,
&c..
&c.
We have, &c.,
R. B. FINLAY. EDWARD CARSON.
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