On 24th February 2017, the Minister for Energy and Minerals of Tanzania has published the Mining Regulations 2017, which states that all mining companies with special mining licenses (SML) must go public by 23rd August 2017.

The mining companies with SML are required to float 30% of their issued and paid up share capital at the Dar Es Salaam Stock Exchange (DSE).

The previous regulation, which was published on October 2016, gave companies with a SML 2 years to list at DSE.

To date only one mining company is listed at DSE, cross-listed Acacia Mining that is involved in gold extraction and processing in Tanzania.

Local ownership is publicized as the main rational for the listing, to allow the wider Tanzanian population to participate in the mineral resources projects.

However, law firm Clyde & Co reminds that companies listed at the DSE are subject to increased transparency requirements, which in turn will assist the government of Tanzania to better monitor the payment of taxes.

In an attempt to make sure that mineral value addition activities are carried out within Tanzania, the Ministry of Energy and Minerals of Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel and silver, with effect from 2nd March, 2017.

The Tanzania Chamber of Minerals and Energy (TCME) issued a statement on 16th March 19, 2017 to clarify its position on the recently introduced ban on exports of concentrate and ore of metallic minerals.

The chamber indicates its disappointment that there was no prior consultation with the affected stakeholders, which would have avoided the significant negative impact on existing operations and future investment into the mining sector.

According to the chamber, under the current situation some mines faces imminent closure because of the loss of revenues from the sale of concentrates.

In addition, the taxes and royalties collected by the government from the mining sector will be significantly reduced.

“The ban, if upheld, will have huge negative social and financial impact to the affected companies and the nation al large,” the statement reads.

This is why the chamber is in the process of engaging the government on how best to address their concerns while making it aware of the scale of damage the ban will do to the mining industry and to potential investments.

TCME believes that the mining companies operating in Tanzania need to be allowed to continue to export their products for smelting until when there us an operational smelter in the country.

Ultimately, the chamber urges the government to consider lifting the ban and to conduct a feasibility study to determine the viability and the preferred practical mechanism to develop smelting capability in Tanzania.

The President of Tanzania Hon. Dr. John Magufuli on 1st April 2017 swore in the members of a special committee to examine the extent and type of minerals contained in mineral sand in containers in various locations in the country.

Prof. Hamis Abdulkarim Mruma heads the committee of 8 scientists from geological, chemical and scientific backgrounds. The Members of the committee are:

1. Prof. Abdulrahman Hamis Mruma

2. Prof. Justianian Rwezaura Ikingula

3. Prof. Joseph Bushweshaiga

4. Dr. Yusuf Ugenya

5. Dr. Joseph could Philip

6. Dr. Ambrose Itika

7. Mohamed Mazengo Makongoro

8. Hery Issa Gombela

The investigation will last 20 days after which the committee will submit its report to the President.

President Magufuli has assured the committee that the Government will provide all the support required to conduct the investigation, including various laboratories and other government institutions.

In addition, President Magufuli announced that he would establish another committee of economists and lawyers to evaluate the current mining policy and legislation, to obtain more information on the mining business in the country.

Tanzania Mineral Sand Export Ban

The Ministry of Energy and Minerals of Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel, and silver, with effect from 2nd March 2017.

The ban is intended to ensure that mineral value addition activities are carried out within Tanzania as emphasized in the Mineral Policy of 2009 and Mining Act of 2010.

However, according to the Tanzania Chamber of Minerals and Energy (TCME) some mines faces imminent closure because of the loss of revenues from the sale of concentrates.

TCME believes that the mining companies operating in Tanzania need to be allowed to continue to export their products for smelting until when there us an operational smelter in the country.

Acacia Mining (LON:ACA, DSE:ACA), the leading gold producer in Tanzania, issued a press release on 24th march 2017 to provide an update on the impact of the Government directive.

“At Bulyanhulu and Buzwagi [gold mines] the combined direct impact of the current directive is the average daily loss of revenues of more than USD 1 million per day […] The mines are continuing to operate as normal and as a minimum have sufficient capacity to be able to place gold/copper concentrate into containers on site beyond the end of April [2017]. However, prior to reaching this point, during April, we will reassess how long we can continue to produce as normal if the ban remains in place and what other measures may be necessary,”, the press release reads.

TMCE urged the government to consider lifting the ban and to conduct a feasibility study to determine the viability and the preferred practical mechanism to develop smelting capability in Tanzania.

Tanzania’s Deputy Minister for Energy and Minerals Dr. Medard Kalemani said during a recent parliamentary session that helium exploration in Lake Rukwa is expected to start next year.

Around 54 billion cubic feet (Bcf) of unrisked prospective recoverable helium resource have been recently estimated in the Lake Rukwa area in Southwestern Tanzania.

Dr. Kalemani clarified that actual production would start after the completion of all the necessary studies and environmental impact assessment.

“The government needs to ascertain the amount of gas available before issuing any production licenses,” he added.

Currently, Helium One Limited hold an exploration license for helium gas in Rukwa Region.

In an exclusive interview with TanzaniaInvest, Thomas Abraham-James CEO of Helium One explained that the company would be finishing exploration at Rukwa by the end of 2017.

In March 2017, Solo Oil plc (AIM: SOLO), an oil and gas investment company with assets in Tanzania (natural gas), West Africa, the UK, and Canada, announced that it has agreed to acquire a 10% interest in Helium One Limited for a total consideration of GBP2.55 milliob.

Solo has also been granted a 90-day call option to increase its investment in Helium One by a further 10%, for an additional investment of GBP 4 million.

According to Neil Ritson, Solo’s Chairman “The global helium market is anticipated to see a sharp drop in supply in the next five years as the US Strategic Reserve ceases sales, and with helium’s increasing use in modern life, such as MRI scanners, Solo has identified Helium One’s world-class assets in Tanzania as a compelling and complementary investment for Solo’s portfolio of oil and gas investments.”

Global demand for helium is growing at a rate that is outstripping supply, which presents a significant pricing opportunity for future producers.

Tanzania has been identified as a key country for helium exploration based on the evidence of surface gas seeps in the geological rift valleys adjacent to the Tanzanian Craton, as well as its strategic location for global exports through its deep-water port at Dar es Salaam.

The President of Tanzania Hon. Dr. John Magufuli on 10^th April 2017 has appointed the members of the second special committee that will investigate the amount and value of mineral sand containers exported since 1998.

The new committee follows the appointment, on 1st April 2017, of the first special committee to examine mineral sand content, made of experts from geological, chemical and scientific backgrounds.

The second committee includes economists and lawyers. The members of the committee are:

1. Prof. Nehemiah Eliachim Osoro

2. Prof. Longinus Kyaruzi Rutasitara

3. Dr. Oswald Joseph Mashindano

4. Mr. Pascal Gabriel Malata

5. Mr. Casimir Sumba Kyuki

6. Ms. Butamo Kasuka Philip

7. Mr. Usaje Benard Usubisye

8. Mr. Andrew Wilson Massawe

Tanzania Mineral Sand Export Ban

The Ministry of Energy and Minerals of Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel, and silver, with effect from 2nd March 2017.

The ban is intended to ensure that mineral value addition activities are carried out within Tanzania as emphasized in the Mineral Policy of 2009 and Mining Act of 2010.

However, according to the Tanzania Chamber of Minerals and Energy (TCME) some mines faces imminent closure because of the loss of revenues from the sale of concentrates.

TCME believes that the mining companies operating in Tanzania need to be allowed to continue to export their products for smelting until when there us an operational smelter in the country.

Acacia Mining (LON:ACA, DSE:ACA), the leading gold producer in Tanzania, issued a press release on 24th march 2017 to provide an update on the impact of the Government directive.

“At Bulyanhulu and Buzwagi [gold mines] the combined direct impact of the current directive is the average daily loss of revenues of more than USD 1 million per day […] The mines are continuing to operate as normal and as a minimum have sufficient capacity to be able to place gold/copper concentrate into containers on site beyond the end of April [2017]. However, prior to reaching this point, during April, we will reassess how long we can continue to produce as normal if the ban remains in place and what other measures may be necessary,”, the press release reads.

TMCE urged the government to consider lifting the ban and to conduct a feasibility study to determine the viability and the preferred practical mechanism to develop smelting capability in Tanzania.

Tanzania gold producer Acacia Mining has released its results for Q1 2017, showing an increase of 15% in gold production compared to Q1 2016, but also a contraction in sales, almost 35,000 ounces lower than production.

Gold production reached 219,670 ounces, while gold sales was 184,744 ounces, in line with Q1 2016, but 34,926 ounces lower than production, primarily as a result of the Tanzanian Government’s directive stopping the export of metallic mineral concentrate, the company explains.

During Q1 2017, revenues reached USD 234 million, 6% higher than Q1 2016, as increased production from North Mara gold mine and a 6% increase in gold price has offset the impact of lower revenue from gold/copper concentrate sales.

The earnings before interest, taxes, depreciation, and amortization (EBITDA) was USD 82 million, 25% higher than Q1 2016, mainly due to slightly higher revenues and lower direct mining costs.

This results in net earnings of USD 27 million (USD 6.5 cents per share), up from a USD 52 million loss in Q1 2016 and up 48% from Q1 2016 on an adjusted basis.

Chief Executive Officer Brad Gordon commented “As announced previously, we continue to engage with the Tanzanian Government in order to be able to resume the export of gold/copper concentrate which has been halted since 3rd March and accounts for approximately 30% of group revenues. Whilst these engagements are ongoing our mines continue to operate as normal and are stockpiling the gold/copper concentrate that has been produced. As a result, at this stage there is no change to guidance for the year.”

Tanzania Gold

Gold production in Tanzania stands at around 1.8m oz per year which makes it the 4th largest gold producer in Africa after South Africa, Ghana, and Mali.

Acacia Mining operates three mines in Tanzania: Bulyanhulu, Buzwagi and North Mara.

The Ministry of Energy and Minerals of Tanzania issued a ban on the export of mineral concentrates and ores  for metallic minerals such as gold, copper, nickel, and silver, with effect from 2nd March 2017.

The ban is intended to ensure that mineral value addition activities are carried out within Tanzania as emphasized in the Mineral Policy of 2009 and Mining Act of 2010.

However, the Tanzania Chamber of Minerals and Energy (TCME) believes that the mining companies operating in Tanzania need to be allowed to continue to export their products for smelting until when there us an operational smelter in the country.

The President of Tanzania Hon. Dr. John Magufuli on 1st April 2017 swore in the members of a special committee to examine the extent and type of minerals contained in mineral sand in containers and on 10th April 2017 appointed the members of the second special committee that will investigate the amount and value of mineral sand containers exported since 1998.

East Africa-focused gold producer Shanta Gold (AIM: SHG) announced its production and operational results for Q1 2017 for its New Luika Gold Mine in Southwest Tanzania, showing an increase of in the gold production of +8% compared to Q4 2016.

Quarterly gold production reached 20,416 ounces in Q1 2017 compared to 18,897 ounces in Q4 2016.

Quarterly gold sales reached 23,252 ounces at an average price of USD 1,249 per ounce, compared to an average spot price of USD 1,219 per ounce.

Forward sales from April to October 2017 stand at 25,000 ounces at an average price of USD 1,292 per ounce.

The company indicates that the Revised Mine Plan (RMP) was delivered as promised lifting gold production by 39% when compared to the 2015 Base Case Mine Plan.

Chief Executive Officer Toby Bradbury commented: “Shanta had a promising start to the financial year with more ounces produced, at a greater margin than planned, ensuring the company is on track to meet its 2017 guidance of 80-85,000 ounces at an All-In Sustaining Costs (AISC) of USD 800 – 850 per ounce.”

Shanta Gold currently has defined ore resources on the New Luika and Singida projects in Tanzania and holds exploration licences over a number of additional properties in the country.

New Luika Gold Mine commenced production in 2012 and produced 87,714 ounces in 2016.

The Ministry of Energy and Minerals of Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel, and silver, with effect from 2nd March 2017

The ban impacted the sale of gold of another large gold producer in Tanzania, Acacia Mining, as indicated in its Q1 2017 results.

However, the ban had no impact on Shanta Gold’s sales as it applies to mineral concentrates and Shanta produces instead doré, a type of gold bar that can contain silver and some impurities.

Doré bars are exported and sold to refineries that produce pure gold bars that comply with London Bullion Market Association standards.

The processing plant that exists at New Luika is appropriate in size and capacity for the Shanta Gold rate of production, which is between 80,000 ounces a year and 90,000 ounces a year.

Tanzania is committed to transform the northern safari capital of Arusha into Africa’s gemstone powerhouse, James Mdoe, Tanzania’s deputy permanent secretary from the Ministry of Energy and Minerals said.

He made the announcement during the opening of the ongoing Arusha Gemstones Fair (AGF).

According to China’s official press agency Xinhua, Mdoe said that the Tanzanian government was committed to removing the obstacles that are undermining mineral trade in the country.

In addition, Joel Bendera, Manyara Regional Commissioner said that the government was working with mining and minerals stakeholders from the private sector to create favorable mining and mineral trading environment and to make Tanzania the Africa’s gem center.

He also reminded that Tanzania had established an Economic Processing Zone in the Mirerani area where Tanzanite is mined and near the Kilimanjaro International Airport (KIA).

Tanzanian Gemstones

Tanzania produces a variety of gemstones, including amethyst, aquamarine, garnet, ruby, sapphire, tanzanite and tourmaline.

Tanzanite is found at only one location in the world, the Mererani Hills of Manyara Region in Northern Tanzania.

The production of tanzanite rose by 17% during 2008–2013, from 768t to 900t, while discovered reserves amount to 500m carats.

The Tanzania Chamber Of Minerals And Energy (TMCE) has issued a press statement to contradict the false allegations that mining companies have not been paying taxes in Tanzania.

“Between 2009 and 2015, the Tanzania Minerals Audit Agency, an arm of the Ministry of Energy and Minerals, reported that these companies collectively paid over USD390 million (TZS 870 billion) in royalties, and USD 305 million (TZS680 billion) in corporation taxes, along with other significant taxes,” the statement reads.

TMCE also reminds that in 2015 alone, the five major gold mines and one diamond mine paid a total of USD 65.5 Million (TZS 146 billion) in royalties to Tanzania’s coffers and over USD 170 million (TZS380 billion) in other taxes. These amounts are expected to have increased in 2016.

In relation to the concerns that have been raised about mining companies incorrectly benefitting by getting VAT refunds, the Chamber clarifies that this is not true.

It explains that mining companies export all that they produce and, as such, like any other exporting industry, are categorized as zero rated under the VAT laws and are therefore eligible to get refunds of input VAT incurred on their purchases.

However, mining companies still pay VAT on specific categories not allowable to be claimed under the VAT law.

TCME also stresses that despite having legally binding agreements (MDA’s) with the Government of Tanzania for which the mining companies can draw various concessions in form of tax reliefs, mining companies have agreed to comply with a number of regulations imposed by the 2010 Mining Code, although most of them contravenes provisions of the MDA’s.

These includes companies no longer capping local service levies at USD 200,000 per annum, but rather paying 0.3% of turnover, as well as increasing the royalty that is paid from 3% of net back value to 4% of gross value.

Several other fiscal stabilization provisions have also been removed from these agreements over time and through various contracts review committees that were formed by the Tanzanian Government.

In relation to corporate tax, the Chamber reminds that large-scale mines are complex operations that require huge capital investment and therefore it takes many years before the investors can recoup their investment and start generating taxable profits.

Furthermore, the point in time from which corporate tax starts to be paid may deviate from the feasibility study forecast due to declines or increases in sale prices or cost of inputs.

However, during the period of recouping the amount invested, the mines do continue to contribute to the Government coffers and to the local economy by paying indirect taxes like import duties, excise duties, skills development levies, service levies, withholding taxes and royalties, as well as PAYE and social security contributions.

The statement concludes that the Chamber is committed to co-operation and open dialogues with the Government of Tanzania on these and other issues that will pave the way for the country and its people to realize the maximum potential of the mining industry, which if well managed can accommodated the potential for more local and foreign investment.

Tax Justice Network Africa (TINA) has recently released a report on the implementation of the Africa Mining Vision in Tanzania titled “Where is the Money? Taxation and the state of Africa Mining Vision implementation: the case of Tanzania”.

This study assesses the current mining sector regime in Tanzania, and in the East African Community (EAC), focusing on the mining fiscal regime as well as revenue use and management.

The objective of the study is to assess the gaps between the situation at the national and regional levels and what the Africa Mining Vision (AMV) aspires to, so as to offer recommendations on areas that need to be addressed.

The study establishes that over the years, Tanzania has improved its national capacity to physically audit mineral production and exports by putting in place a dedicated mineral audit agency, the Tanzania Minerals Audit Agency (TMAA).

This has resulted in the identification of unpaid taxes owed, while also helping build the capacity of mining companies to calculate tax revenues payable.

Following the introduction of the Mining Policy of 2009, Tanzania has also undertaken reforms in the tax systems to increase revenue from the mining sector, which has seen the contribution of mining tax revenue to total tax revenue increasing from 2.41% in 2001 to about 4.41% in 2014.

However, the study points out that Tanzania still needs to do more with respect to reviewing the terms of double taxation agreements and bilateral investment treaties that it has signed with host countries of mining companies.

There are possibilities that the country lost some taxing rights to investors as the regime has become too protective of investors, the report suggests.

In addition, the manner in which the mining development agreements are being negotiated also appears to have outcomes that are in favor of the investor than Government, thereby reducing revenues.

Concerning mining sector revenue use and management, Tanzania is now at an advanced stage in establishing a sovereign wealth fund in the gas sector.

However, the report stresses the need for sovereign wealth funds to also be established with respect to other minerals, as these are finite resources which need to also take cognizance of the need for future generations.

TJNA is a Pan-African organization and a member of the Global Alliance for Tax Justice, which promotes socially- just, accountable and progressive taxation systems in Africa.

The Mining Act, 2010 provides the basis for the mining fiscal regime in Tanzania.

In addition to the Mining Act, 2010, legislation relevant for the mining sector includes the Income Tax Act Cap. 332 Revised Edition 2008 and the Value Added Tax Act, 2014.

Under the current administration of President Magufuli, mining companies’ operations in Tanzania are being increasingly scrutinized to identify any tax avoidance, for which two special committees have been established.

In return, the Tanzania Chamber Of Minerals And Energy (TMCE) has issued a press statement to contradict the false allegations that mining companies have not been paying taxes in Tanzania.

TMCE stresses that despite having legally binding agreements (MDA’s) with the Government of Tanzania for which the mining companies can draw various concessions in form of tax reliefs, mining companies have agreed to comply with a number of regulations imposed by the 2010 Mining Code, although most of them contravenes provisions of the MDA’s.

East Africa-focused gold producer Shanta Gold (AIM: SHG), has announced that the first stope ore has been produced from the New Luika Gold Mine (“NLGM”) underground operation in the Southwest of Tanzania.

The underground ore is being sourced from a long-hole open stope between the 900 – 880 metre levels in the Bauhinia Creek orebody.

Establishment of further stopes will continue throughout 2017, Shanta indicates. to support the increasing production scheduled from the underground operations.

Coincidentally, ore was also intersected in the Luika orebody on the 937 metre level, ahead of schedule, with first production ore from Luika scheduled in Q4 2017.

Toby Bradbury, CEO of Shanta Gold, commented: “In September 2015, Shanta announced its Base Case Mine Plan with a commitment to commence underground production from Bauhinia Creek in Q2 2017 at the New Luika Gold Mine. Every material milestone has been achieved in the delivery of this project which is a credit to the entire Shanta team.”

“After a strong Q1 2017, gold production in Q2 is running ahead of expectations with favourable grades being achieved from the Ilunga open pit, reaffirming the Company’s production guidance for 2017 of 80-85,000 oz,” Bradbury concluded.

The New Luika Gold Mine commenced production in 2012 and produced 87,714 ounces in 2016.

The Government of Tanzania has released yesterday the report of the Presidential Committee’s investigation into the contents of gold, copper and other minerals in the mineral sand in containers for export.

The report, in Shawili, identifies major discrepancies in the average concentration of these minerals, per ton of mineral sand, resulting in losses of revenue from royalties.

Gold
The Committee has identified large quantities of gold between 671 g / t to 2,375 g / t, equivalent to an average of 1400 g / t.

This average is equivalent to 28 kg of gold in a container with 20 tons of gold ore.

Thus, the 277 containers of mineral sand blocked at the Port and Dry Port of Dar es Salaam and will have approximately 7.8 tons of gold worth TZS 676 billion (USD 307 292 720), the report explains.

The committee reminds that the Tanzania Minerals Audit Agency (TMAA), the government’s body responsible for monitoring and auditing of mining operations, recorded an average gold concentration of 200 g / t, equivalent to 4 kg of gold per container.

Copper
The average amount of copper identified in the 277 containers is 1440.4 tons which is worth TZS billion 17.9 (USD 8,138,260).

However, shipping documents that the Committee received from port revealed that the average rate of copper is equal to 4 tons of copper in each container, equal to 1,108 tons of copper for 277 containers with a value of TZS 13.6 billion (USD 6,204,800).

Other Minerals
The Committee also analyzed and identified discrepancies in the concentration and value of other minerals, including silver, sulfur, iron, iridium, rhodium, ytterbium, beryllium, tantalum, and lithium.

In its recommendations, the Committee advises the government to maintain the suspension shipment of mineral sand abroad unless royalties are paid based on the real value of concentrate as outlined in the investigation.

Also, it advises TMAA to seal the containers immediately after sampling to avoid frauds that can happen afterward.

The Committee finally advises the government to ensure that the construction of smelters in the country takes place as soon as possible.

Following the presentation of the results of the investigation, on the same day, President Magufuli revoked the appointment of the Minister of Energy and Mines Prof. Sospeter Muhongo, with immediate effect.

The president also dissolved TMAA board of directors and suspended TMAA Chief Executive Officer.

Tanzania Mineral Concentrates Exports Ban
Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel and silver, with effect from 2nd March 2017, and established two special committees to examine the extent, types and values of minerals contained in mineral sand in containers for export in various locations in the country.

The ban heavily affected Tanzanian gold producer Acacia Mining (LSE:ACA) who reported a reduction in sales of almost 35,000 ounces lower than production in its results for Q1 2017, because of the ban, the company explains.

Following the release of the investigation yesterday, Acacia re-iterated that it fully declares everything of commercial value that it produces and pays all appropriate royalties and taxes on all of the payable minerals that it produces.

The company also indicates that it will provide a further update to the market as soon as practical.

Tanzanian gold producer Acacia Mining (LSE:ACA) issued an update with respect to the findings of the Presidential Committee’s investigation into the export of gold and copper concentrates, which were presented to the President of Tanzania H.E. Dr. John Magufuli on 24th May 2017.

Although Acacia has not yet received a copy of the full report, it has analyzed the summary findings published and made a number of observations that discredit the findings.

In particular, the company explains that its own verified data shows that the 277 containers of mineral sand at Dar Es Salaam port, which have been the object of the investigation, contain 26,000 ounces of gold in total.

Each of these containers contain on average around 3 kg (around 100 ounces) of gold, 3 kg of silver and 3,000 kg of copper.

The Committee’s findings, however, were that the gold content of these containers, which represent one month’s production, totaled 7.8 tons (or 250,000 ounces).

The company reminds in its update that in 2016 it produced and sold 250,000 ounces of gold in concentrate from these two mines in the whole of the year.

However, the Committee’s findings imply that Bulyanhulu and Buzwagi each produce more than 1.5 million ounces of gold per year, Acacia explains.

This would mean they are the two largest gold producers in the world; that Acacia is the world’s third largest gold producer; and that Acacia produces more gold from just three mines than companies like AngloGold Ashanti produce from 19 mines, Goldcorp from 11 mines, and Kinross from their 9 mines, Acacia concludes.

The company also stresses that its declarations of gold production and sales revenues exactly match the gold and silver ounces and copper tons that the company produces, sells and declares.

“Acacia’s production and financial statements and figures are all fully audited, and demonstrate that Acacia does not benefit from the extra gold (10 times more gold) that the Committee’s findings imply Acacia has not declared […]Our exporting of the concentrate takes place in full compliance with Tanzanian law and the legal agreements that we have with the Tanzanian Government,” the update reads.

Acacia indicates that it will make further detailed observations once it receives the Committee’s full report.

Tanzania Mineral Concentrates Exports Investigation
Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel and silver, with effect from 2nd March 2017, and established two special committees to examine the extent, types and values of minerals contained in mineral sand in containers for export in various locations in the country.

The ban heavily affected Acacia Mining, who reported a reduction in sales of almost 35,000 ounces lower than production in its results for Q1 2017, because of the ban, the company explains.

Following the presentation of the results of the investigation, on the same day, President Magufuli revoked the appointment of the Minister of Energy and Mines Prof. Sospeter Muhongo, with immediate effect.

The president also dissolved the board of directors of the Tanzania Minerals Audit Agency (TMAA), the government’s body responsible for monitoring and auditing of mining operations, and suspended its Chief Executive Officer.

Barrick Gold (NYSE:ABX) (TSX:ABX), the largest gold mining company in the world, commented on the potential impact of the ongoing ban on mineral concentrate exports affecting the operations of its Tanzanian subsidiary Acacia Mining (LSE:ACA).

Barrick holds a 63.9% equity interest in Acacia, although the company is operated independently, Barrick indicates.

Financial results from Acacia are consolidated for accounting purposes. Cost and production information from Acacia is presented on an attributable basis in Barrick’s quarterly and annual mine statistics and annual guidance.

Barrick’s current 2017 guidance assumes a contribution of 545,000-575,000 ounces of gold (63.9% basis) from Acacia, at a cost of sales of USD 860-USD 910 per ounce, and all-in sustaining costs of USD 880-USD 920 per ounce.

Acacia operations at the Bulyanhulu and Buzwagi gold mines are being impacted by the current ban on concentrate exports from Tanzania, Barrick reminds.

Acacia’s impacted operations account for approximately 6% of Barrick’s 2017 gold production guidance, and in total for approximately 10% of Barrick’s 2017 gold production guidance.

“Barrick is offering Acacia its full support as Acacia works to resolve this matter with the government of Tanzania. Barrick will evaluate any necessary adjustments to its full-year outlook should Acacia determine a revision to its own 2017 guidance is required”, Barrick’s press release reads.

Tanzania Mineral Concentrates Exports Ban & Investigation

Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel and silver, with effect from 2nd March 2017, and established two special committees to examine the extent, types and values of minerals contained in mineral sand in containers for export in various locations in the country.

The ban heavily affected Acacia Mining, who reported a reduction in sales of almost 35,000 ounces lower than production in its results for Q1 2017, because of the ban, the company explains.

The results of the investigation of the first committee were released on 24th May 2017. They identify major discrepancies in the average concentration of these minerals, per ton of mineral sand, resulting in losses of revenue from royalties.

On the same day, President Magufuli revoked the appointment of the Minister of Energy and Mines Prof. Sospeter Muhongo, and dissolved the board of directors of the Tanzania Minerals Audit Agency (TMAA), the government’s body responsible for monitoring and auditing of mining operations, and suspended its Chief Executive Officer.

However, Acacia discredited the committee’s findings, as these imply that Bulyanhulu and Buzwagi mines each produce more than 1.5 million ounces of gold per year.

This would mean they are the two largest gold producers in the world; that Acacia is the world’s third largest gold producer; and that Acacia produces more gold from just three mines than companies like AngloGold Ashanti produce from 19 mines, Goldcorp from 11 mines, and Kinross from their 9 mines, Acacia explained.

Acacia will make further detailed observations once it receives the committee’s full report.

Tanzanian largest gold miner Acacia Mining (LSE:ACA; DSE:ACA) issued a market updated and hosted a conference call on 2nd June 2017 to explain the company’s current situation in Tanzania, following the ban on the export of mineral concentrates and ores for metallic minerals introduced in March this year by the Tanzanian government.

CEO Brad Gordon explained that the company’s mines in Tanzania continue to operate as normal, producing and selling gold doré whilst stockpiling gold/copper concentrate.

As of 31st May 2017, the company has approximately 85,000 ounces of gold, 4 million pounds of copper and 50,000 ounces of silver contained within unsold concentrate, which amounts now to 1,100 containers held in the country.

“In light of the increased levels of uncertainty we have seen some impact on productivity levels but at this stage, we are not making any changes to full-year guidance and continue to take steps to minimize further cash outflows from the business”, the market update reads.

The ban was introduced to ensure that mineral value addition activities are carried out in the country, after which the President of Tanzania Dr. John Magufuli established two special committees to examine the extent, types, and values of minerals contained in mineral sand in containers for export.

The findings of the first committee’s investigation were announced on 24 May 2017, identifying major discrepancies in the average concentration of these minerals, per ton of mineral sand, resulting in losses of revenue from royalties.

On the same day, President Magufuli revoked the appointment of the Minister of Energy and Mines Prof. Sospeter Muhongo, with immediate effect, dissolved the board of directors of the Tanzania Minerals Audit Agency (TMAA) and suspended its Chief Executive Officer.

However, Acacia made a number of observations that dispute and discredit the committee’s findings.

“We don’t know how they got their results. We haven’t seen the report, we have requested it and asked for an independent review, as we dispute the finding […] You don’t need to be too expert to understand that those findings are not correct”, Gordon explained during the conference call.

Details of the company’s observations on the findings are available here: www.tanzaniainvest.com/mining/acacia-discredit-committee-findings-export-gold-copper-concentrates.

Meanwhile, Acacia is co-operating with the second committee, which was set up to examine economic and legal issues associated with historic exports of gold/copper concentrates.

“We have provided extensive information to the second committee and have provided access to each of our mine sites. We believe that the committee is close to completing its work, following which we would welcome the opportunity to discuss the findings directly with senior government officials and remain hopeful that we will be able to reach a resolution to the current ban on exports, but we continue to consider all options”, Gordon explained.

He also stressed that Acacia will continue production as it is for some time, although it is losing USD 15 million per month in revenues as a consequence of the ban, and will not be changing its full-year guidance.

He also commented on the government’s intentions to establish smelting capacity in the country: “To make it viable, as per 2011 report of TMAA, it needs 150,000/200,000 tons of mineral concentrate per year. We produce 50,000/60,000 tons per year. However, we are prepared to work with the government to ascertain whether smelting is viable in the country with current technologies.”

Mining companies in Tanzania are also expected to list 30% of their share capital at the Dar es Salaam stock exchange (DSE), by August this year.

To this regard, Andrew Wray, Chief Financial Officer of Acacia Mining, explained that the company has engaged with the ministry to discuss alternatives to reach their objective without “trying to create liquidity in the market where it does not exist”, referring to the recent IPO of mobile operator Vodacom at DSE – the largest IPO in Tanzania to date – which has been extended to allow investors more time to participate.

“The regulation points out that the license mining holder has to list; this would make interesting if Buzwagi and Bulyanhulu mines are listed separately, so it would make more sense to make something at the group level which is part of what si being discussed with the Ministry”, Wray explained.

Acacia Mining already listed at DSE in 2011, to promote broader liquidity and ownership of its shares in Tanzania as part of the company’s longer term commitment to the country.

The Government of Tanzania will impose a clearing fee of 1% of the value of minerals export.

Prime Minister Hon. Dr. Philip Mpango made the announcement when presenting to the National Assembly the estimates of Tanzania’s government revenue and expenditure for 2017/18.

“The Government will not allow direct exportation of minerals from the mines to other countries and instead it will establish clearing houses at the international airports, mining areas and other appropriate areas where the minerals will be verified and issued export permit before being exported. The Government will impose a clearing fee of one percent of the value of minerals”, Mpango explained.

The announcement follows the introduction in March 2017 of a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel, and silver.

According to the Ministry of Energy and Minerals of Tanzania, the ban intends to make sure that mineral value addition activities are carried out within Tanzania.

A subsequent committee was established to investigate the extent and type of minerals contained in mineral sand in containers in various locations in the country.

The outcome of the investigation was released on 24th May 2017, identifying major discrepancies in the average concentration of the minerals, per ton of mineral sand, resulting in losses of revenue from royalties.

However, Tanzanian largest gold miner Acacia Mining discredited the committee’s findings and is asking for an independent review.

Meanwhile, the Tanzania Chamber of Minerals and Energy (TCME) commented that under the current situation some mines faces imminent closure because of the loss of revenues from the sale of concentrates, and demanded the uplift of the ban.

The President of Tanzania Dr. John Magufuli requested the relevant authorities and the Parliament to review and amend the laws pertaining to the mining, and the oil & gas industries.

The order follows the presentation on 12th June 2017, of the second report on mineral concentrates exports, which claimed tax evasion and major irregularities by the gold mining companies operating in Tanzania.

In particular, the report claims that between 1998 and March 2017, between 44,000 and 61,000 containers of mineral concentrates worth between USD 49.12 billion and USD 83.32 billion were exported, without the country earning anything in royalties and taxes.

The second report also alleges that Acacia Mining (LSE:ACA, DSE:ACA), Tanzania’s largest gold producer, has under-declared revenues and tax payments over a number of years.

This is why the report recommends the payment of outstanding taxes and royalties, renegotiating large-scale Mineral Development Agreements and the Government’s ownership in the mines, and maintaining the current ban on mineral exports that was introduced in March 2017.

President Magufuli also ordered the investigation of all former and current government officials who were involved in the signing of mining agreements.

President Magufuli already revoked the appointment of the Minister of Energy and Mines Prof. Sospeter Muhongo, and suspended the Chief Executive Officer of the Tanzania Minerals Audit Agency (TMAA), following the presentation of the first report on the contents of gold, copper and other minerals in the mineral sand in containers for export, that claimed major discrepancies in the actual amounts of minerals.

However, Acacia Mining strongly refutes these accusations included in the second and in the first report.

“We have always conducted our business to the highest standards and operated in full compliance with Tanzanian law. We reiterate that we have declared everything of commercial value that we have produced since we started operating in Tanzania and have paid all appropriate royalties and taxes on all of the payable minerals that we produce. In addition, our published accounts are annually audited to an international standard in accordance with IFRS”, the company explains in his latest announcement.

In addition, Acacia Mining discredits the first report, which claims that Acacia has under-declared its exports, and calls for an independent investigation and a lifting of the export ban until this work is completed.

“Acacia completely refutes this and does not understand how the Committee could have come to these findings. On the 12th June 2017, the Second Committee reported its findings, which are based on the erroneous figures within the First Committee report. Acacia believes that the Company and more importantly Tanzania would be served best through an independent investigation and a lifting of the export ban until this work is completed.”

TANZANIA MINING
Mining and quarrying activities in Tanzania contributed 3.7% to its GDP with USD 1.78bn in 2014, compared to only USD 598m in 2009.

Minerals export accounted for USD 1.37bn of the total value of Tanzania’s export in 2015 (i.e. 24%) with gold representing more than 90% of the country’s minerals export.

According to Tanzania’s Development Vision 2025 plan, the mining sector is expected to account for 10% of the GDP by that year.

However, the Tanzania Chamber of Minerals and Energy (TCME) believes that under the current situation some mines faces imminent closure because LINK of the loss of revenues from the sale of concentrates.

The ban on mineral exports already heavily affected Acacia Mining who reported a reduction in sales of almost 35,000 ounces lower than production in its results for Q1 2017.

Gold mining company Shanta Gold (AIM: SHG) and junior exploration company Helio Resource (TSXV: HRC) have entered into a definitive agreement on 19th June 2017 pursuant to which the former will acquire all of the issued and outstanding common shares of the latter.

Canadian based Helio Resource owns 100% of the Saza-Makongolosi Project (SMP) gold project that covers an area of 238km2 in the Lupa Goldfield in Southwest Tanzania, adjacent to the New Luika Gold Mine (NLGM) operated by Shanta Gold.

Helio’s resource consists of an NI 43-101 compliant gold resource of 635k gold oz at an average grade of 2.4g/t.

All of these resources are located within 20km of the Shanta’s existing NLGM processing plant.

The acquisition will result in an increase in Shanta’s gold resource ounces of 77% from 824koz at 1.9g/t to 1,459koz at 2.09g/t.

Dr. Toby Bradbury, CEO of Shanta commented: “The inclusion of the Helio resources into Shanta’s portfolio strengthens the opportunity to deliver an expansion option for the New Luika Gold Mine and to also potentially extend mine life. This comes after our recent announcement of the Nkuluwisi resource of 4 million tons for 141k oz at 1.1g/t. New Luika is well established with long-term water security and low cost and long life power servicing an established and efficient processing plant.”

Richard Williams, CEO of Helio commented: “After many years of exploration efforts and a number of economic assessment studies it is clear that the best outcome for Helio shareholders is to combine with Shanta for the development of Helio’s gold resources on its SMP property in Tanzania. This all share transaction represents a unique opportunity for Helio shareholders to participate in the future growth and value creation of the New Luika Gold Mine.”

Tanzania Gold

Tanzania gold reserves are estimated at about 45m ounces (oz). Gold exploration has been centred mostly on the greenstone belts around Lake Victoria, where several large deposits have already been discovered and are being developed.

In April 2017, Shanta announced its production and operational results for Q1 2017 for NLGM, showing an increase of in the gold production of +8% compared to Q4 2016.

The Parliament of Tanzania has published on 29th June 2017 the proposed draft legislation to change the legal framework governing the natural resources sector in Tanzania.

The draft bill is to be debated by the Parliament in an extended Parliamentary session.

OreCorp (ASX: ORR), a Western Australian based mineral company with gold and base metal projects in Tanzania commented on the draft legislation with concerns: “Based on the Company’s preliminary review of the draft legislation, the Company believes that, if passed by the Tanzanian Parliament without any substantial amendments, the proposed changes may potentially have an adverse effect on the Nyanzaga Project.”

The Nyanzaga Gold Project is a joint venture with Acacia Mining (LSE: ACA), Tanzania’s largest gold miner.

“Acacia will review the proposed changes in the context of our existing agreements and will provide further updates as appropriate,” the company commented on its website.

Shanta Gold (AIM: SHG), another gold mining company with interests in Tanzania with its flagship New Luika Gold Mine commented: “Shanta will seek advice on the proposed changes and will provide further updates as appropriate.”

Meanwhile, both Cradle Resources (ASX: CXX) that owns 50% of the niobium Panda Hill deposit in Tanzania and Graphex Mining (ASX: GPX) that coarse flake Chilalo Graphite Project in south-east Tanzania have been granted a trading halt by the Australian Securities Exchange, pending details of draft changes to mining legislation proposed by the Tanzanian government.

In addition to the new draft mining legislation, the Parliament of Tanzania has also approved the new Finance Act, which will impose a 1% clearing fee on the value of all minerals exported from the country from 1 July 2017.

Mining has placed Tanzania in the higher ranks of African economies in terms of attracting FDIs.

The mining sector share of the country’s GDP at current prices was 3.4% in the financial year 2014/15.

However, Tanzania’s National Five Year Development Plan 2016/17 – 2020/21, stresses that most of the mineral resources are being exported in their raw form without being processed, denying the country jobs and value addition activities.

Just a few days after having introduced its draft new mining laws, the parliament of Tanzania has passed the three bills on 3rd July 2017, allowing for the government to renegotiate mining contracts.

The parliament has passed The Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms)] Bill, 2017, The Natural Wealth and Resources (Permanent Sovereignty)] Bill, 2017 and The Written Laws (Miscellaneous Amendments)] Bill, 2017.

The new laws follow the introduction in March 2017 of a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel, and silver.

This has particularly affected Acacia Mining (LSE: ACA), Tanzania’s largest gold miner, wich has been accused by the Government of playing down the amounts of declared exported minerals until the introduction of the ban.

Acacia has strongly refuted the accusation, reiterating that “the exporting of the concentrate takes place in full compliance with Tanzanian law and the legal agreements that we have with the Tanzanian Government.”

Today, Acacia announced that Notices of Arbitration were served in Tanzania on behalf of Bulyanhulu Gold Mine Limited (“BGML”), the owner of the Bulyanhulu mine, and Pangea Minerals Limited (“PML”), the owner of the Buzwagi mine.

“This is in accordance with the dispute resolution processes agreed by the Government of Tanzania in their Mineral Development Agreements with BGML and PML,” Acacia explains.

The company adds that “The serving of the Notices is necessary to protect the Company, but, this notwithstanding, Acacia remains of the view that a negotiated resolution is the preferable outcome to the current disputes and the Company will continue to work to achieve this.”