Tanzania accuses Acacia of illegal mining in fresh blow to Barrick’s subsidiary

Published by MAC on 2017-06-13
Source: Mining.com, Xinhua, The Citizen

Tanzania accuses Acacia of illegal mining in fresh blow to Barrick’s subsidiary

Shares collapsed on the news.

Cecilia Jamasmie

http://www.mining.com/tanzania-accuses-acacia-illegal-mining-fresh-blow-barricks-subsidiary/

12 June 2017

Shares in Acacia Mining (LON:ACA) collapsed Monday after the government of Tanzania accused the gold miner of operating illegally in the country and said it has evaded taxes for years.

A second special committee appointed by Tanzania’s President John Magufuli found that Acacia, majority owned by Barrick Gold — the world’s largest producer of the precious metal—, was not registered in the country.

It also alleged that Acacia has “under-declared” revenues and tax payments “over a number of years by tens of billions of US dollars,” local paper The Citizen reported.

As a result, the commission recommended that Tanzania demand the repayment of outstanding taxes, review the possibility of increasing government ownership of mines, and continue with an export ban on gold concentrate affecting the company.

Such prohibition was imposed on Acacia Mining at the start of March, when the president ordered a probe into metal exports in an attempt to capture more of the value from mining for the country.

The gold producer, which spun off from Barrick Gold in 2010, said in a statement it was disappointed at the findings, adding it “strongly refutes” the “new unfounded accusations.”

Acacia’s shares dropped as much as 15% and were still close to that low by the end of Monday in London, trading 13.7% lower at 259.8 pence by 4:00PM local time.

The fresh accusations come after another presidential team said in May it had found the value of minerals within raw concentrate at the port of Dar es Salaam to more than 10 times the declared amount. Acacia has also denied that accusation and said the finding contain “significant discrepancies.”

Barrick, which holds a 63.9% interest in Acacia, said in a separate statement it believed a negotiated resolution to the ongoing dispute between the Tanzania-focused miner and the government of that country was "the best way to achieve an outcome that is fair and reasonable for all stakeholders."

The Toronto-based miner was quick to point out, however, that Acacia Mining is operated independently, adding that financial results are consolidated for accounting purposes only.

Mining law review

President Magufuli responded to the report by ordering ordered relevant authorities to immediately review and adjust mining laws to ensure that the nation benefited from its resources.

Speaking on national TV, Magufuli said firms exported minerals worth as much as 381 trillion shillings ($170.2 billion) between 1998 and 2017, declaring as much as 40% fewer containers than they actually shipped, Xinhua reports.

"Mining contributes 3.5% to the gross domestic product of Tanzania, which is Africa’s fourth-largest gold producer."

He qualified those companies as “ruthless,” as they have taken gold and other minerals, “but revenues, taxes, they didn’t pay.”

Mining contributes 3.5% to the gross domestic product of Tanzania, which is Africa’s fourth-largest gold producer. The government, however, wants to increase that piece of the pie by requesting more taxes from the sector. It has been on a drive to add value to its exports rather than send raw materials abroad.

Additionally, the nation is pushing mining firms to list a 30% stake on the Dar es Salaam stock exchange by August, claiming the move will increase transparency and spread wealth from Tanzania’s natural resources.

The ongoing dispute between the East African nation and mining companies has already claimed its first victim. In March, three weeks after the export ban on Acacia was imposed, a potential $4 billion merger between that miner and Canada’s Endeavour Mining (TSX:EDV) [sic]. Talks about the potential combination of both companies had been first confirmed in January.

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Tanzanian president fires mining minister and chief of state-run agency

By Fumbuka Ng'wanakilala

http://www.reuters.com/article/us-tanzania-mining-idUSKBN18K19F

24 May 2017

DAR ES SALAAM - Tanzania President John Magufuli fired his mining minister and the chief of the state-run mineral audit agency on Wednesday after an investigation into possible undeclared exports by mining companies to evade tax.

Magufuli's decision, announced in a televised speech, signals an escalation of tensions between the government and the mining industry, which has denied engaging in tax evasion.

Mining accounts for about 4 percent of the East African nation's gross domestic product.

Magufuli said the investigation report revealed that Acacia Mining declared the presence of gold, copper and silver in its mineral sand exports but did not declare other precious metals in the consignments.

"The committee (investigating the exports) found that there were many other minerals in those shipping containers that were not declared, such as sulfur, iron, iridium, titanium and zinc," Magufuli said. "They were also under-invoicing the actual gold, copper and silver content in those shipping containers."

The report said that Acacia declared about 1.1 tonnes of gold in the containers but an analysis established that the shipment contained up to 15 tonnes.

The company denied any wrongdoing and said it had not yet seen the report.

"Acacia reiterates that it fully declares everything of commercial value that we produce and pay all appropriate royalties and taxes on all of the payable minerals," the company said in a statement.

Shares Plunge

Acacia's share price fell by more than 14 percent to 374 pence after the announcement -- its biggest fall since March 3. By 1111 GMT (7:11 a.m. ET) the shares had recovered some ground to 388 pence, down 10.6 percent.

Acacia, majority owned by Barrick Gold, has three Tanzania gold mines that also produce copper. It is also exploring in other parts of Africa.

Magufuli also said that the Minister for Mines and Minerals, Sospeter Muhongo, and the state-run Tanzania Minerals Audit Agency (TMAA) were guilty of failings in the monitoring of gold and copper concentrate exports.

"I like Professor Muhongo very much ... he is my friend, but I would like him to assess himself on this issue and vacate his position without delay," Magufuli said after receiving the report on examinations of more than 250 impounded shipping containers of gold and copper concentrates.

Magufuli also sacked the agency's chief executive, Dominic Rwekaza, and disbanded the board of the mineral audit agency, saying they failed to supervise exports properly.

Neither Muhongo nor representatives of the Tanzania Minerals Audit Agency were immediately available for comment.

Magufuli, nicknamed The Bulldozer for his propensity to push projects through, launched a major crackdown on corruption shortly after taking office in 2015.

The anti-graft drive has felled ministers, the head of the port, the tax chief and thousands of civil servants, though some companies claim they are being fined for crimes they did not commit.

(Writing by Katharine Houreld; Editing by David Goodman)

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Tanzania: PM Allays Investors' Fears Over Ban

The Citizen

30 March 2017

Dar es Salaam — Prime Minister Kassim Majaliwa calmed down mining investors affected by the ban on export of copper concentrates, saying the government wants to clear doubts over its real composition and if it was getting the revenue it deserved.

Mr Majaliwa made an impromptu visit to the Buzwagi Gold Mine (BZGM) on Monday and said while the government recognised the role of the investors, it also has to clear doubts that the country was not being short-changed with regard to copper concentrates export.

"I want to assure Tanzanians questioning this exercise that we are not doing this to scare away investors, we want to satisfy ourselves on what is going on with our mines. We want to satisfy ourselves that charge is appropriate," he told BZGM workers and residents.

The PM's statement comes in the wake of heightened debate over the unexpected ban of export of gold and copper ore by President John Magufuli early in the month.

The President visited the Dar es Salaam Port last week and inspected 20 containers of copper concentrate that had been cleared for export.

Speaker of the National Assembly Job Ndugai also visited the port and announced that he will form a parliamentary team to look into the copper concentrates export saga.

As of yesterday, authorities were still holding about 300 containers belonging to Acacia following President Magufuli's ban. At Buzwagi, Majaliwa's team collected samples of copper concentrates from over 100 containers destined for export for testing at government laboratories.

"We want to verify if the mineral sand we export contained a minimal amount of gold while copper form the highest percentage of it so that we satisfy ourselves if the tax we get from the business is what we actually deserve," he said.

Most importantly, said the PM, was that the government would want to see the mineral sand is sorted locally as speculated in the Mining Policy of 2009. "So, let Acacia investors and its employees worry not about this exercise. We wouldn't want to see Acacia lay off employees; we are jut checking...rest assured your production will continue," he said. BZGM, established in 2009, employs 720 permanent and 500 temporary workers.

In Dar es Salaam, small scale miners urged the government to lift its ban on exports of all concentrates and ore metallic minerals, arguing some were facing imminent closure due to loss of revenue.

Tanzania Small-Scale Miners Association chairman Thobias Rweyemamu said at least 67 containers of copper (60) and nickel (7) were being seized, a move he said has caused them huge losses on the daily basis.

He said the government should conduct a feasibility study to determine the mineral deposits before installing a smelter.

A small miner King Selemani said he was now paying $20 (Sh45,000) daily in storage charges per each container held at a yard in the city.

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Tanzanian parliament to review mining contracts to control exports of copper concentrates

Xinhua News Agency

26 March 2017

DAR ES SALAAM -- Tanzanian parliament said on Sunday it will review the east African country's mining contracts with foreign firms aimed at improving proper documentation of exported copper concentrates for the benefit of the country.

The parliamentary action came just a day after the Tanzania Ports Authority (TPA) in collaboration with security agents impounded over 260 export-bound shipping containers with copper concentrates from Buzwagi Gold Mine (BZGM) stored in Dar es Salaam.

Last week, Tanzanian President John Magufuli visited the Dar es Salaam port and ordered the seizure of 20 containers ferrying copper concentrates from the same mining firm.

On Sunday, President Magufuli sacked the Permanent Secretary in the Ministry of Energy and Minerals, Justin Ntalikwa, apparently in connection with the copper concentrates exports.

Job Ndugai, Speaker of the National Assembly, accompanied by a team of Members of Parliament, inspected the seized containers with copper concentrates at the Dar es Salaam port and said the parliamentary review team will analyse the process of transporting the copper concentrates and how they were exported abroad for smelting.

"There has been a feeling that we are being cheated as a nation on this issue, therefore as parliament we have decided to play our role of advising the government on the issue," said the House Speaker.

Ndugai added: "We want to get details of how the copper concentrates are analyzed, packed and exported from the source. This task will also involve reviewing mining contracts."

Deusdedit Kakoko, TPA Director General, said more than 50,000 containers with copper concentrates move out of the country every year.

Kakoko said since the country passed laws to allow the exportation of copper concentrates in 1998, over one million containers with copper concentrates have left the country.

He said newly installed scanners at the port have helped to a large extent to seize containers ferrying copper concentrates, adding that there has been a good collaboration from various governments' agencies in seizing the containers.

"We are sure that the copper concentrates in these containers have 90-percent mineral content, therefore we need a special team that will carry out a second analysis of the concentrates so that we find out what the content is," said Kakoko.