Canada’s Barrick Gold (TSX, NYSE:ABX), the world’s top bullion producer by volume, has warned that up to 6% of it expected output for 2017 may be severely hit by a ban on mineral concentrate exports affecting its subsidiary Acacia Mining (LON:ACA), in Tanzania.
The Toronto-based miner, which holds a 63.9% stake in Acacia, noted that if the subsidiary needed to revise its forecast for the current year, then Barrick would evaluate any necessary adjustments to its own 2017 outlook.
Acacia, which spun off from Barrick in 2010, accounts for roughly 10% of the Canadian miner’s 2017 gold production guidance of 5.3-5.6 million ounces.
The gold miner’s comments come on the heels of a report published Wednesday that claims Acacia has been under-reporting the amount of metal in its shipments to evade taxes.
Tanzania’s presidential committee found the value of minerals within concentrates in containers at the port city of Dar es Salaam was more than 10 times the amount declared by Acacia. As a result, the nation decided to keep an export ban issued in March on the London-listed miner’s copper and gold concentrates.
The probe’s results also led to President John Magufuli firing his mining minister and shutting the board of the mineral audit agency, which he accused of failing to supervise exports properly.
Acacia, Tanzania’s largest miner which spun off from Barrick in 2010, accounts for roughly 10% of the Canadian miner’s 2017 gold production guidance of 5.3-5.6 million ounces.
The company refuted the committee’s findings Friday, saying that if they were correct it would imply that Acacia “is the world’s third largest gold miner” and “produces more gold from just three mines than companies like AngloGold Ashanti from 19 mines, Goldcorp from 11 mines, and Kinross from their 9 mines.”
Toronto-based Barrick said its current full-year forecast includes a contribution of 545,000-575,000 ounces of gold from Acacia, at an all-in sustaining production cost of $880-$920 per ounce of gold.
The Tanzania-focused miner has three major gold mines in the country, which also produce copper.
5 Comments
Altaf
I dont know exactly what happened but from reports the truth lies between what govt committee claims and what Barrick refutes. It may not be true that all samples resulted in gold concentration of 10 times of declared, but definitely most of them are under declared. The undeclared benefits must have been shared by every one involved in the operation from port officials to audit agency and up to the minister along with Barrick officials.
Tanzania lost rightful revenews and Barrick lost credentials due to the under the table operations by few people.
Looking at the volume of the concentrates generated per year, and to add value to govt coffers, it is better if Acacia installs a gold / silver refinery and copper smelter in Tanzania.
Tanzania gets more industry, technology, employment and consequently more GDP.
Foreign companies operating in poor / countries with technological deficiency should always assist the nations in developing.
Memo mtoko
THIS IS RAMPANT IN THE WHOLE OF AFRICA. BIG INTERNATIONAL CORPORATES ARE STEALING. THEY DECLARE ON MINERAL BUT ON THE OTHER SIDE OS THE MARKET GET BENEFIT FROM ALL THE MINERALS CONTAINED
FreeThinker
Frankly, if you were to organise fraud on such a massive scale as Tanzania is pretending to believe of Acacia, would you do so in such a way as to be so easily found out? Where concentrate is tested several times before export, including by Government agencies, and can easily be randomly retested? In a context where your sole source of income is locked in a single country and derived from assets that can so easily be targeted by Government? The facts that “findings” were not provided to Acacia to allow them to respond and that the “report” has not been made public clearly demonstrate that the whole initiative is lacking in scientific integrity and easily refutable.
Let’s please for once suspend the inane “foreign corporations are stealing our minerals” charade and try to consider facts here: Tanzania wants to pursue a local processing policy it can neither justify nor afford; it has tried to pressure Acacia and others into shouldering the costs and risks of such an ill-conceived enterprise; and it is now resorting to lowly tactics to claim fraud in the hopes that throwing a tantrum will force everyone to accept their will. Tanzania are so transparent in their bad faith as to be laughable if they did not endanger a significant African gold producer… Let’s perhaps spare a thought for the thousands of local jobs, service providers and contractors that would be affected if Acacia cannot withstand this situation and has to suspend operations? Its investors will soon be clamouring for just that if this mess continues – and then we can discuss the value of African minerals to national economies when resources remain in the ground for lack of foreign investment!
Denz
Why on earth are they exporting concentrates and not smelting their gold on site like all the other big miners in Tanzania? Why add the additional costs of exporting high volumes of concentrate? I’m sorry but this stinks to high heaven.
minedout
Barrick and their predecessors have operated in Tanzania for nearly 3 decades. I’m sad to see this loss of trust ensue. I hope clear heads supported by facts prevail. I also find it very hard to believe that Acacia are knowingly committing fraud. For the sake of the good people of Tanzania who are supporting their families through direct and indirect employment in the mining industry, I hope this misunderstanding is resolved soon, with systems put inplace to restore trust.