Acacia Mining export ban remains amid Tanzania accusations of deception

Acacia Mining has been accused by the Tanzania government of under-declaring the mineral content of its gold and copper exports, so the export ban on the London-listed company will continue.

A presidential committee investigation into the export of gold/copper concentrates has stated that Acacia "has not fully declared all of the minerals contained in the concentrate".

Tanzania has therefore not lifted the ban on export of metallic mineral concentrates that has been in place since March.

The report declared the value of minerals within the concentrates in Acacia's containers currently at the Dar es Salaam port was more than 10 times the declared amount.

Acacia has requested further clarification and to see a full copy of the report, which was made by a committee made up of academics and industry professionals appointed by President John Magufuli who had investigated the contents of the company's concentrate containers and reported to the head of state on Wednesday in an event that was beamed live on domestic television and radio stations.

"Acacia re-iterates that it fully declares everything of commercial value that we produce and pay all appropriate royalties and taxes on all of the payable minerals that we produce," the FTSE 250 company said in a statement on Wednesday.

Acacia, which has three producing mines in north-west Tanzania, last year generated around 30% of its $316m revenues from gold/copper concentrate, or $26m per month.

Analyst Yuen Low at Shore Capital said the committee's report looked like bad news for Acacia.

"It suggests to me that getting the concentrate export ban is likely to prove a much harder task than anyone would previously have envisaged," he told Sharecast, refusing to speculate on any wider government agenda.

"It’s a case of ‘watch this space’ and see what develops. There may have been some sort of ‘honest mistake’ by the Presidential Committee in how they assessed concentrate composition and value."

Presidential tax plans

There were reports in March that the ban was part of a government effort to increase domestic beneficiation, although Investec analysts said while Tanzania hardly has the concentrate production to justify its own smelter, the main concerned was that the ban was part of ongoing government attempts for a greater tax grab.

President Magufuli formed the committee of two probe teams of 16 experts in April, with the first committee comprised of eight experts in geological, chemical and scientific backgrounds while the second drew its eight members from economy and law.

Mining contributes 3.5% to the GDP of Tanzania, which is Africa’s fourth-largest gold producer, but, reported local Daily News newspaper, the government wants the sector to pay more taxes and has been on a drive to add value to its exports rather than send raw materials abroad.

Acacia, which has offered to help build the government a smelter in the country, has been taking action to try and manage the financial impact at its Bulyanhulu and Buzwagi mines, which have continued to operate as normal but are missing out on more than $1m per day in revenue.

Management said last month that would reassess how long the mines can continue to produce as normal if the ban remains in place, as gold sales in the first quarter of the year fell by almost 35,000 oz from the fourth quarter due to the Tanzania hiatus and flat on the first quarter of 2016, though the company enjoyed a 6% increase in gold price.

ShoreCap's Low said Tanzanian officials may be taking inspiration from the success of the Indonesian government’s similar ban on nickel.