Tanzania bans exports of gold and copper concentrate, sends Acacia Mining lower

News that Tanzania had banned exports of gold/copper concentrate has hit the shares of London-listed Acacia Mining, which is the east African country's largest gold miner.

Mining

10,633.77

15:45 15/11/24

1.51%

158.40

On Friday, the President of Tanzania revealed the directive via a Ministry of Energy and Minerals press release.

Acacia, which has three producing mines in north-west Tanzania, last year generated around 30% of revenues from gold/copper concentrate.

"At this stage, Acacia has ceased exports of gold/copper concentrate and is urgently seeking further clarification from the Ministry of Energy and Minerals," the company said in a short statement.

The company's shares were already moving lower on Friday as the gold price dropped, but after the announcement emerged in London afternoon the shares dropped over 11% to 470.82p.

On Monday there were reports that the ban was part of a government effort to increase domestic beneficiation.

But Investec analysts said Tanzania hardly has the concentrate production to justify its own smelter.

"We expect this issue to be resolved but are concerned it is part of ongoing government attempts for a greater tax grab. ACA has a good balance sheet (cash of US$318m) so is able to withstand a concentrate inventory build-up although not indefinitely."

They noted that as concentrate amounted to 30% of 2016 revenue, or $316m or $26m per month, Acacia’s $363m decline in market cap on Friday was equivalent to more than an entire year of concentrate losses.