Tanzania-focused miners face fresh challenges as country passes new laws
Mining companies operating in Tanzania face fresh challenges as the country鈥檚 lawmakers have approved two laws that allow the government to renegotiate or revoke existing contracts.
The bills,聽which aim at providing the state with a greater share of revenue from the country鈥檚 natural resources, are part of a major overhaul of Tanzania鈥檚 mining industry that began in March, when President John Magufuli banned mineral exports.
On top of reviewing current contracts, the new laws call for a ban on unrefined mineral exports and a 1% 鈥榠nspection fee鈥 on the value of the permitted exports.
At the time he also ordered an audit of containers carrying ore to find the cause of income losses. That probe found that the value of minerals within concentrates in containers at the country鈥檚 Dar es Salaam port was in some cases up to 10 times more than the declared amount.
The results of such audit triggered the Sospeter Muhongo and was聽followed by the government accusing Acacia Mining (LON:ACA), which聽, of for years.
Mining contributes 3.5% to the gross domestic product of Tanzania, which is Africa鈥檚 third-largest gold producer. The government, however, wants to increase that piece of the pie to 10% by 2025 thanks to the new laws: the聽 (Review and Re-Negotiation of Unconscionable Terms) Act聽and the聽 (Permanent Sovereignty) Act.
Acacia Mining excluded from聽talks
The new legislation could further complicate Acacia鈥檚 situation in the country. In fact, the firm that notices of arbitration have been already served on behalf of two of its subsidiaries.
Acacia management聽has been excluded from talks with the government as Barrick steps in.
The arbitration between Bulyanhulu Gold Mine, the owner of the Bulyanhulu mine, and Pangea Minerals, which owns Buzwagi, will聽be conducted by Barrick, Acacia聽.
It noted the course of action was聽in line with a dispute resolution process agreed with the Tanzanian government in Mineral Development Agreements with the subsidiaries.
Acacia said it will not participate directly in the discussions when they聽start, but told investors that any deal reached would be subject to its approval, and that it would 鈥渨ork with Barrick as necessary to support such discussions鈥.
Tanzania鈥檚 authorities have informed Barrick they want to . The world’s largest gold producer, which has a 64% stake in Acacia, is hoping to聽reach a settlement over claims that its subsidiary has been聽聽by understating the amount of metal concentrate in exports from the three gold and copper mines it operates in the country.
The laws passed late Monday will also impact the operations of other mining companies operating in Tanzania, such as AngloGold Ashanti (JSE:ANG), Petra Diamonds (LON:PDL) and Shanta Gold (LON:SHG).
Some of them have already expressed their disappointment and said President Magufuli is聽setting unfair restrictions on them by raising fines and demanding higher tax contributions.
{{ commodity.name }}
{{ post.title }}
{{ post.date }}
8 Comments
Vusi
It serves them, they have been fleecing the country’s resources for decades without any consequences. It’s long overdue for these conglomerates to face the music..
Nasser Nassir
I agree with all that 100%
I agree with all that 100%
Aubu
Awesome observation and a remarkable stance.
Hennie
The African continent needs cash investments from international Companies to develop their Mining infrastructure in order to create wealth not only for the investing Companies but also for job creation and growth for the people of that country. Laws such as that in Zimbabwe scares off potential investors and disadvantage the workers of that country.
What is important is that a time line should be set for the training workers to take responsible control over the Mines, thus reducing he need for hiring experts from other countries like South Africa and Australia at higher than normal wages to manage the mining
Novatus Mushi
We are much focused on investors that is why we have this stringent laws against them. What we need is technology and skilled manpower so as to extract our own resources.
RDC1378
Well done Tanzania – corruption both official and commercial weeded out. WIth Barrick retaining 64% of the company in question there are good prospects for recovering lost taxes after some kind of multi year court battle. Looking for more of the same from neighboring countries and administrations.
gustavo rodriguez
Barrick did it again…. not just Africa, They are applying similar bad industry/policy practices elsewhere in the world (Argentina for example).
“ABX, which owns 63% of Acacia, is trying to convince Tanzanian Pres. Magufuli to lift an export ban on gold concentrate and reach a settlement over claims that Acacia has been under-reporting the amount of the concentrate it exports by a factor 10x – essentially amounting to a multi-million dollar fraud”
Gold has been the “fools folly” ever since man discovered its glitter! Looks like the “fools folly” now is coming out into the open in beautiful #Tanzania! May God have mercy on the souls of all the “fools dancing to gold’s folly” And may God bless the people of Tanzania, in enjoying God’s bounties every day! hendrickus of Ourplace