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Tanzania Wages War Against Gold Miners

Tanzania Gold

Things are getting serious in one of Africa’s top gold nations. With the national government stepping up a fight that’s already cost local miners billions in market valuation.

The place is Tanzania. Where regulators this past week took aim at one of the country’s biggest gold and copper producers — accusing them of cheating on royalties.

Those claims came in a report last week published by a special committee of Tanzanian president John Magufuli. With the committee publicly saying that Acacia Mining — 64 percent owned by gold major Barrick — has understated the value of its gold exports by up to 10 times.

The charges come after Acacia has officially been under investigation since March. When the Tanzanian government halted the company’s exports of gold-bearing concentrate.

At the time, it appeared the export blockade was a tactic to encourage Acacia to develop in-country upgrading of concentrates — a theme that’s been spreading globally of late. But this week’s official charge of under-reporting represents a significant escalation of the government’s campaign.

Acacia’s share price fell 30 percent on the day the accusations were released. Continuing a slide that’s seen the miner lose over $1 billion in value so far in 2017.

On Friday, Acacia’s management did fight back against the allegations. Saying that the government’s estimates on the gold content of the company’s concentrates are completely unrealistic.

But the government has failed to compromise on the issue. With reports suggesting that Acacia management hasn’t even been provided a full copy of the report, or details on the methodology the government used to calculate concentrate grades.

Amid such headwinds, Acacia and Barrick both said they may have to shut down the Tanzanian mines altogether. Which would be a significant blow to production for both companies — and to global gold supply. Watch for any last-minute reprieves from the government, and for announcements on next steps for these operations.

Here’s to things heating up.

By Dave Forest

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  • Naomi on June 26 2017 said:
    Africans and Venezuelans kill their golden geese.

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