To say Acacia Mining (LON:ACA) is having a rough time in Tanzania is to underestimate the challenges the company, one of the largest gold producers in Africa, has been facing in the last few weeks.
The miner, Tanzania’s No.1 gold producer, is in the midst of a bitter dispute with the Eastern African’s country’s government, which — among other things — has accused Acacia of tax evasion and illegal operations, served the firm with a $190-billion bill in fines and allegedly outstanding taxes, questioned staff and even blocked one of the firm’s senior executives last week from leaving the country.
World’s largest gold miner Barrick hopes to reach an agreement over both the claims against its subsidiary and the current ban on mineral concentrate exports.
The escalating conflict pushed world’s largest gold producer Barrick Gold (TSX, NYSE:ABX), which has a 64% stake in Acacia, to intervene earlier this month by mediating in the dispute.
The Canadian gold miner said Monday it had formally begun talks high-rank Tanzania’s government officials to try solving the ongoing dispute between the country and Acacia, which denies all accusations.
The Tanzanian side in the talks is being led by Justice and Constitutional Affairs Minister Palamagamba Kabudi and Barrick by its chief operating officer Richard Williams, according to a statement quoted by Reuters.
Barrick’s chairman John Thornton and President John Magufuli met in June in Dar es Salaam and agreed to discuss an export ban on gold and copper concentrates as well as “other issues” that have hit Acacia very hard, prompting a collapse of the stock value.
The news gave investors some hope, and Acacia’s shares were slightly up (+0.57%) to 175.40p in late trading in London at 4:27PM local time. The stock, however, has lost more than 67% of its value since the export ban came in effect in March this year. The situation is so delicate that the miner warned last week it would have to close its flagship Bulyanhulu mine by Sept. 30 if the prohibition is not lifted.
Acacia, which owns and operates Tanzania’s three major mines, is also facing a lawsuit in the UK from relatives of miners who died at North Mara. Law firm Deighton Pierce Glynn is acting on 10 cases, most of which relate to incidents since 2013, and one as recently as last year.
According to Tanzania’s official data, 65 civilians have been killed by police at North Mara for trespassing since 2006 and another 270 have been injured.
13 Comments
mamahelen
Blood gold.
Madolla Korra
Westerners feel sorrow for greedy western companies because their govts eat through those bloody investments. They have to think about poor people and their resources.
Nick
However, is it the fault of the company if the royalties never reach the people. Isn’t it possible that government officials embezzled the royalty payments for their own benefit? Which has now caused this major over-reaction by Tanzania.
John Bayo
Let them come openly how much they paid and expose any cartels they were dealing with,then we know exactly who embezzled the royalties. Our government is fighting corruption and if that is the case then it will help us a lot in our war against corruption. Truly there was a lot of under declaration in the sand exported for smelting and sincerely hope the containers are still there at the port for independent verification. This will tell the whole world who is saying the truth. Remember some of these multinational companies if not all have been doing a lot of dubious deals in a lot of developing countries. They have taken advantage of ignorance and know how of the masses there and milked them like they did when colonizing Africa. They now want Africa to be their economic slaves in spite of having abundant natural resources.
Timmy G
Either way, Magufuli will be a very rich man soon
ThaOracle
What if I were to tell you ……… NO DIFFERENT THAN ZIMBABWE, and Acacia should not cave to an extortion agenda. Look what it got Freeport. As a shareholder and as they can’t move the ore bodies, I say stoke the dumpster fire and write it off. Maybe it will bring an end to the enviro-social justice trash that exists. Since they want to “take back what is theirs”, let them do it and remove every single element of plant, equipment and proprietary material, cave all UG & OP development, and transfer out/evacuate all expats. They too can have a government/economy just like Zims. Having worked in Tanz and the region for 15 yrs, I can honestly say they wouldn’t have the wheel today had expats not shown up, and that nothing would exist without the capital investments made. And while I think of it, ALL Canadian and US foreign aid must be cut off.
Eradius Katigano
Are you talking with your phone or just using your brain as a damped white materials in your head?
Gary
Tanzania has had independence for about 50 years. Surely this has given the locals plenty of time to amass the skills required for successful mining on their own without having foreigners do it for them. Or have they?
Kyle
Standing on the edge of an active dig face. Hmmm….
Enoch Pax
Just a shakedown; the question is how affordable or how greedy?
Stella Evelyne Tesha
So far we are only talking tax evasion. In my opinion, ACACIA mining company should be thankful it is ONLY fined charged 190billion USD. The local and global environmental impacts caused by the company will last for hundreds of years. Impacts on health alone would last for generations. Honestly, the Tanzanian government should consider making the fine at least 190Billion USD * 500 years. On that note, environmentalists should probably be invited to make accurate calculations based on life cycle assessments and environmental impacts assessment…. just my opinion.
Deonatus F. N. Mutani
Aw dubul’ibhunu, dubula dubula, Ayasab’ amagwala, dubula dubula…
The above phrase so much befits anyone coming to Africa for the purpose of stealing, cheating and plundering.
WE ARE AWAKE, YES WE ARE, NOW!
Frank
for people jumping on conclusions that Acacia are thieves…. please get your facts right…. to guess the grade of the concentrate, the gvmt practically dipped their finger, tasted it and said that the grade is 9 times what Acacia declared …. XRF, if not used properly, are worth nothing for grade estimation of Gold…. and that’s what the Tanzanian gvmnt did to estimate the grade of the concentrate in the containers …. c’mon …. Sounds more like a way to stop activities and force Acacia to renegotiate a mining agreement based on inadequate facts… This is not good for the tanzanian gvmnt credibility ….