Dar es Salaam - Tanzania’s
government accused Acacia Mining of operating illegally in the East African
country and said mining companies have been evading taxes. Acacia’s shares
slumped.
An audit ordered by President John Magufuli in March found
that Acacia had been conducting business in Tanzania “contrary to the law,”
Nehemiah Osoro, chairman of a committee of academics, lawyers and economists
that conducted the probe, said at a briefing Tuesday in the commercial capital,
Dar es Salaam. The audit covered mineral exports over the past 19 years.
“We should summon them and demand that they pay us back our
money,” Magufuli said after receiving the committee’s report. “If they accept
that they stole from us and seek forgiveness in front of God and the angels and
all Tanzanians and enter into negotiations, we are ready to do business.”
Acacia’s shares dropped as much as 14 percent and were 10
percent lower at 269.40 pence by 12:06 p.m. in London. The company, which is majority owned
by Barrick Gold Corp., said in an earlier statement that it has “fully
cooperated” with the audit committee’s work.
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The accusation is the latest sign of deteriorating relations
between Acacia and the country where it mines all its gold. Last month, a
Tanzanian presidential committee investigating the export of gold and copper
concentrates, a semi-processed form of ore, said that Acacia hasn’t fully
declared all the minerals contained in its concentrate. Acacia said it revealed
everything of commercial value that it produces and pays all appropriate
royalties and taxes.
Acacia slid almost 40 percent in two days after the first committee
report last month. The firm has been in dispute with the government since the
country issued a surprise ban on concentrate exports in March. The restriction
is costing Acacia about $1 million a day in sales and the company has said it
may be forced to shutter its flagship Bulyanhulu mine unless a solution is
found.
Acacia also said that it will make another statement “as
soon as practical” following Monday’s presentation by the government.
Mine Concern
“If no resolution is found over the summer we would expect
Bulyanhulu to be placed on care and maintenance,” Numis Securities Ltd. said in
a note to investors Monday.
Before the concentrate ban was introduced, Acacia had been
making progress in turning around the troubled Bulyanhulu operation, with
output at the mine increasing 6 percent in 2016 to the highest in a decade.
Concentrates accounted for 45 percent of Bulyanhulu’s
revenue last year and about 30 percent of the company’s total sales. Magufuli
is overhauling Tanzania’s mining industry as he seeks to generate more revenue
to help finance projects including the building of a new port, railway and oil
pipeline.
Last month, the president fired Mines Minister Sospeter
Muhongo after a separate probe found mineral exports had been understated.
‘Big Sin’
Companies exported minerals worth as much as 381 trillion
shillings [$170.2 billion] between 1998 and 2017, and declared 40 percent fewer
containers than they actually shipped, Magufuli said. Unpaid taxes by mining
companies operating in Tanzania
could amount to as much as 108.5 trillion shillings, he said.
“These people are ruthless,” a visibly agitated Magufuli
said in a live broadcast. “They have taken all this gold and other minerals,
but revenues, taxes, they didn’t pay.”
The president said he agreed with all 20 recommendations in
the report. Proposals include maintaining the mineral-export ban until all
back-taxes are paid, having companies receive their revenue in Tanzanian bank
accounts and renegotiating mining agreements to allow the state to buy shares
in the companies.
The report also recommended that any arbitration be handled
by Tanzanian courts and that the government rectify mining and tax laws to make
the industry more beneficial to the nation.
Companies have mined diamonds, for example, in Tanzania since
1949. The government’s stake in those companies has fallen to 35 percent from
50 percent, but the state has yet to receive any dividends, Magufuli said.
“This is inhuman and it’s a big sin,” Magufuli said. “What
curse have we been burdened with?”
BLOOMBERG