Acacia Mining said on Monday it would stop underground work at its flagship Tanzanian gold mine and cut its production guidance in the face of a confrontation between the industry and the government.

Shares in the FTSE 250 company plummeted 9 percent to 188 pence by 1000 GMT, making it the biggest decliner among an index of its peers. Acacia, majority-owned by Barrick Gold, said it would have to scale back operations at Bulyanhulu mine and cut staff as it coped with a government ban on exports of unprocessed ore, imposed in March to encourage the construction of a local smelter.

The ban had left a build-up of ore inventory and cut revenue as the firm met taxes and other bills, Acacia said in a statement. It had already cut costs, but the company was burning through cash and more action was needed.

"The impact of the ban, in addition to the deterioration of the current operating environment, has led to negative cash flow of approximately $15 million per month at the mine and thus has made ordinary course operations at Bulyanhulu unsustainable," it added in a statement.

Underground activity will cease and the processing of underground ore would stop within four weeks, under a programme "to preserve the viability of our business over the longer term," the company said.

Annual production is expected to be 100,000 ounces lower than the bottom of the previous guidance range of 850,000-900,000 ounces, it added. Acacia has been caught up in sweeping changes to Tanzania's mining industry spearheaded by President John Magufuli, who believes his country is not getting its fair share of profits.

The government also accuses Acacia of evading taxes for years by under-declaring exports - an allegation dismissed by the company which said in July it had been hit with a $190 billion tax bill, equivalent to four times the East African country's annual gross domestic product.

Despite the cash burn, Acacia's chief financial officer Andrew Wray said the company did not need additional financial resources or financial assistance from its Canadian parent Barrick.

"From our perspective we still have reasonable liquidity as on the balance sheet," said Wray said. "We're not contemplating looking beyond Acacia's resources at this time." A combination of scaling back Bulyanhulu, cutting corporate overheads, expansionary drilling at its largest mine North Mara, greenfield exploration activity and gold hedging should return Acacia back into cash generation next year, the miner said.

"Regrettably, the implementation of this programme will lead to a significant reduction in the workforce from the current 1,200 employee and 800 contractor roles," Acacia said.

Acacia first signalled intentions to mothball Bulyanhulu in June. "Acacia has implemented a sensible holding pattern – Bulyanhulu can be restarted without significant effort, but the company moves into a considerably more viable operational and financial position in the meantime," Investec analysts said.

"We expect this to now move the pressure onto the president – if he actually cares." Talks between the Tanzanian government and Barrick Gold are ongoing, Acacia said.

 

The Tanzanian government has asked Acacia Mining, a subsidiary of the world’s largest gold mining company Barrick Gold, to pay approximately USD$190 billion in revised taxes, interest and fines.

This latest development is a game changer in a dispute that pits mining companies against President John Magufuli’s government. It makes both nationalisation and mine closures more likely.

Until this revised tax notice was served, the overhaul of Tanzania’s mining regime had a great deal going for it. Previous policy had given miners an easy ride. Low taxes and generous license terms were sweetened by further tax breaks and exemptions.

Tanzania’s mining sector contributes nearly 3% to GDP annually. Tanzanite and diamond mines are scheduled to be joined by large uranium, coal and iron projects which are under development, but the largest operational mines produce gold. Acacia and AngloGold Ashanti run 4 large gold mines between them that extracted 37 tonnes of gold last year. According to the World Gold Council, Tanzania is the fourth largest gold producer in Africa.

Recently three laws were passed that squeeze the mining companies for revenue. They include shareholding entitlements, higher royalty rates and further tax rises.

The new legislation introduced sweeping new requirements intended to support the country’s industrial goals. Mining companies are now required to train Tanzanians, give preference to local suppliers and to source from joint ventures between domestic and foreign firms if domestic suppliers cannot be found. These rules mean additional costs for miners, but a boost for Tanzanian employees and firms that could become nascent industries.

While the new requirements were all painful for mining companies, they promised significant benefits for Tanzania and merited a try. Ultimately, engineers and economists will have to calculate whether mining companies can make those concessions without operating at a loss.

But the questions are technical and the answers are not well established. It’s possible that the mines could still be economically viable even after this policy overhaul.

Whether its tactics were good or not, the Tanzanian government had reasons for adopting a brazen approach to negotiations with the mining companies too. After it announced a series of changes in 2016, it was confronted by mining company intransigence. Their development agreements enshrined protections against all manner of intrusions and impositions. They seemed resolved to impede changes by resorting to delaying tactics, legal obstacles and arbitration.

But Magufuli’s decision to scrap development agreements between the government and mining companies and to prohibit international arbitration sent a clear message: companies didn’t have a lot of choice. His unilateral and combative approach smacks of domestic politics. But it could also serve to dissuade the mining companies from a course of resistance.

It showed mining companies how far the Tanzanian government was willing to go and how much they wanted. It quickly provoked concessions. Acacia agreed to some of the terms two weeks ago. But if it hoped these would placate Magufuli, they were wrong.

Counting to $190 billion

Until the tax bill was tabled, it seemed as though Magufuli wanted a new settlement with the mining companies. Now it looks as though he wants new mining companies.

To put the USD$190 billion figure in context, all the proven and probable gold in Acacia’s mines is worth just over USD$10 billion at today’s prices. Including sites under exploration and the further inferred and estimated deposits, there is a further USD$24 billion worth of gold, and further deposits of silver and copper.

After these minerals are mined and processed, profits will be just a fraction of that. And even if there is as much gold as guessed, it will take decades to liberate it. In short, Acacia can never make enough to pay USD$190 billion in taxes. It would close the mines before they paid a sum that tall.

The sum of USD$190 billion was reached in fines, interest and backdated tax revisions in light of two presidential committees. The first reported that Acacia had grossly under reported the amount of gold in containers of copper-gold concentrate bound for export. The second estimated the revenue that the government had lost over the years, and the tax demand takes that into account.

If the committee findings were correct, Acacia might be sitting on enough gold to pay up, but this is not likely. If the committee’s conclusions were true, Buzwagi and Bulyanhulu mines would be the second and third largest in the world. Tanzania would have produced not 55 tonnes of gold last year, but 154 tonnes. That would represent approximately 5% of world gold mine production. Sums of that scale affect shares, currency appreciation and even the world gold price, and that makes it unlikely that past production was kept secret as the committee suggests.

What next?

There are any number of reasons for the Tanzanian government’s decision to submit the tax demand – even if it doesn’t think that Acacia will ever pay. It could be a further bargaining ploy, a plea for attention, a failure of coordination or a strategic miscalculation.

But the most likely explanation is that this is part of a mounting campaign to drive the miners out of Tanzania altogether. Last week, Magufuli announced that if the mining companies continued to delay negotiations,

I will close all mines and give them to Tanzanians.

With every new development, this threat seems less and less an idle boast.

 

Dan Paget, DPhil Politics (African electoral politics), University of Oxford

This article was originally published on The Conversation. Read the original article.

Tanzanian President John Magufuli said on Monday he has signed into law new mining bills which require the government to own at least a 16 percent stake in mining projects.

The laws, which also increase royalties tax on gold and other minerals, were passed by parliament last week despite opposition from the mining industry body. Magufuli reiterated on Monday that no new mining licences would be issued until Tanzania “puts things in order” and that the government would review all existing mining licences with foreign investors.

“We must benefit from our God-given minerals and that is why we must safeguard our natural resource wealth to ensure we do not end up with empty mining pits,” Magufuli told a rally in his home village in Chato district, northwestern Tanzania.

The president has sent shock-waves through the mining community with a series of actions since his election in 2015, which he says are aimed at distributing revenue to the Tanzanian people. The new mining laws, which were fast-tracked through parliament, raise royalties tax for gold, copper, silver and platinum exports to six percent from four percent.

They also give the government the right to tear up and renegotiate contracts for natural resources like gas or minerals, and remove the right to international arbitration. “I would like to thank parliament for making the legislative changes. I signed the bills into law the same day Parliament concluded its session on July 5,” Magufuli said.

Passage of the new legislation also followed months of wrangling between the government and the country’s biggest gold miner, London-listed Acacia Mining Plc, over mining contracts after Magufuli decided in March to ban exports of gold and copper concentrates to push for the construction of a domestic mineral smelter. Magufuli said on Monday that talks between Tanzania and Barrick Gold Corp., Acacia’s majority owner, would begin in two days to try to resolve allegations of tax evasion against Acacia.

Tanzania accused Acacia of tax evasion in 2016 in a case that is ongoing. Acacia, which denies all allegations, said on July 4 it was seeking an adjudicator to resolve its dispute with the Tanzanian government. 

Tanzania is also pushing for the mandatory listing of mining companies on the Dar es Salaam Stock Exchange (DSE) by August as part of measures aimed at increasing transparency and spreading wealth from the country’s natural resources.

Other major foreign-owned mining companies in Tanzania include AngloGold Ashanti and Petra Diamonds.

 

Source: Reuters

Aliko Dangote is now a coal miner as Tanzania has offered his Dangote Cement Company in the southeastern town of Mtwara, land to mine coal for its operations.

Tanzania’s Ministry of Energy and Minerals at the weekend handed a 10-square-kilometre plot of land to the $500 million cement factory set up in 2015 by Aliko Dangote, Africa’s richest man. The factory has an annual capacity of 3 million tonnes.

According to NAN and local media The Citizen, the coal concession was sanctioned by President John Magufuli to allow the company get a reliable supply of coal to fuel its activities.

Tanzania has banned the importation of coal from South Africa and Tancoal, the only one coal producing company in the country, cannot meet the entire market demand. Dangote runs on expensive diesel generators and requested Tanzanian government support last year to supply natural gas at a reduced price.

President Magufuli later intervened after a meeting with Nigerian billionaire and the company’s owner Aliko Dangote over stalled negotiations on prices.

He blamed middlemen for the delay in supply plans and said Dangote “will now buy natural gas directly from the state-run TPDC (Tanzania Petroleum Development Corporation)”. Dangote, Africa’s biggest cement producer, is seeking to double Tanzania’s annual output of cement to 6 million tonnes. It plans to roll out plants across Africa.

 

- NAN

Image 20170308 24182 1whteph
Tanzania’s President John Magufuli is praised by some for his “no nonsense” attitude. Reuters/Thomas Mukoya

Rob Ahearne, University of East London

The Arusha Declaration of 1967 is a defining document in Tanzania’s and Africa’s post colonial history. It began a process of nationalisation and rural collectivisation which was then replicated in other parts of the continent.

As one of the few countries in East Africa not beset by internecine conflicts, Tanzania is often seen as a beacon of hope. But the country’s history hasn’t been entirely peaceful.

For example, the creation of the United Republic in 1964 was the outcome of a bloody revolution in Zanzibar. And the forced resettlement of the rural population in the 1970s was often brutal. The supposedly backward south of the country was most affected by this social engineering. 

Julius Nyerere, Tanzania’s first post-independence leader, might be rightly revered across Africa for the role his government played in various liberation struggles. But his domestic agenda isn’t recalled with the same fondness, especially in the south. Multiparty democracy came to Tanzania in 1995. Yet the autocratic and paternalistic tendencies remain, as reflected in the extremely heavy-handed nature of the response to unrest in Mtwara in 2013.

This is also echoed by the actions and rhetoric of current President John “the bulldozer” Magufuli. While some celebrate his “no nonsense” attitude when it comes to tackling corruption and excessive government spending, others express major concerns over his ban on opposition political rallies until the 2020 general election. He’s also drawn ire for the failure of his government to implement court rulings on human rights.

And the country has witnessed major protests at the management of newly discovered reserves of natural gas in the south. As a result there’s a widespread view across southern Tanzania that for half a century the central government has pursued a deliberate process of mistreatment and marginalisation.

Rural collectivisation is a significant milestone in such claims, a process that was kick-started by the Arusha Declaration. The document’s 50th anniversary is a prescient moment to reflect on its impact and the legacy of autocratic rule in Tanzania.

Tumultuous times

My fieldwork over many years in southern Tanzania has revealed widespread scepticism about the value of independence to the inhabitants. Uhuru – or independence – from Britain in 1961 is seen to be a less significant moment in the lives of many rural Tanzanians than the Arusha Declaration.

As a 90-year old farmer told me:

Tanganyika became Tanzania and our flag changed, (Queen) Elizabeth left and (President) Nyerere arrived. The leaders knew about these changes but nothing changed for me… Change came after Nyerere’s speech in Arusha, he told us about ujamaa and we were forced to move from our villages.

Many Tanzanians living in the southern parts of the country feel the same way. This isn’t surprising given that the declaration triggered rural collectivisation (villagisation) which brought about tangible changes to people’s lives. It also cemented the language of ujamaa or “African Socialism”. Villagisation was guided by the belief that communal farming could improve agricultural productivity and guarantee long-term food security and self-sufficiency.

At the outset Nyerere declared that migration to ujamaa villages would happen voluntarily. Forcing people to move wouldn’t be countenanced by the state.

But when only 15% of the total population chose to resettle between 1969 and 1973 the governing Tanganyika Africa National Union decreed that:

to live in villages is an order.

Nyerere’s increasing sense of urgency is reflected both in his famous phrase “we must run while others walk” and in the decision to rapidly transform voluntary migration into mass resettlement. Many people that I interviewed recalled this as a brutal process.

People were moved by force, the soldiers came, they came to worry the people, and they were taken, all of their things were destroyed or put in a truck.

Not all recollections of this process were universally negative. But first hand experiences of villagisation had a profound and lasting impact on many people.

These were tumultuous times in the country, also reflected in increased authoritarianism in Tanzania from the late 1960s onward. Renowned Ugandan academic Mahmood Mamdani describes the events as “decentralized despotism” – a paternalistic urban elite making decisions for the “backward” rural poor. This, he argued, bore many of the hallmarks of colonial modes of rule within post colonial power structures.

There have been other critiques of the ujamaa villages project. It not only affected people on the ground but also precipitated a national food crisis.

One of my interviewees blamed Nyerere directly for

destroy[ing] our farms and houses to build something that he called the nation.

Why caution is required

Magufuli’s sky high national approval ratings show no signs of abating. This adds further fuel to the comparison that is made with Julius “father of the nation” Nyerere. The autocratic nature of Nyerere’s rule, informed by a clear sense of paternalism towards the rural majority, mirrors the colonial model and is reflected in contemporary political leadership in Tanzania.

I believe that there’s merit in the argument that the forcible resettlement of the rural majority under Nyerere partially mirrored colonial modes of rule. The worrying thing is that further continuities are evident in the enactment of the Arusha Declaration and the authoritarianism of today. This should be food for thought for those heaping praise on the new regime in Tanzania.

Rob Ahearne, Senior Lecturer in International Development, University of East London

This article was originally published on The Conversation. Read the original article.

Tanzania is rich in exciting wildlife that has helped make it a thriving tourist destination. But some of its less photogenic species could also play an important role in the country’s economic development.

In the beautiful setting of Zanzibar it’s easy to forget that around a third of Tanzanian children under five are stunted due to malnutrition. One in ten women are also undernourished. They are more likely to give birth to underweight infants, perpetuating the impact of undernutrition down the generations.

Population growth is increasing demand for animal protein. Fish and fisheries products can provide a valuable source of protein, as well as essential micronutrients for balanced nutrition and health. But domestic production is unable to keep pace. So imports are filling the gap. Between 2010 and 2013 imports of fish and fishery products increased by 240%. Worldwide, aquaculture – the farming of plants, algae (for instance, seaweed), and animals in aquatic environments – grows faster than any other food-production sector. This is often referred to as a blue revolution. In Africa, the industry is growing by 11.7% every year. But 90% of that growth is in just two countries – Egypt and Nigeria.

In Tanzania, aquaculture is still largely a small-scale rural initiative. It is characterised by small pond culture and contributes only 1.4% to GDP. There is much greater potential.

Inland water covers about 6.5% of the total land area, including the Great Lakes –- Lake Victoria, Tanganyika and Nyasa/Malawi. The lakes are recognised as one of only 25 biodiversity hotspots in the world because they are home to hundreds of species of cichlid fish. These include around 30 species of tilapia, 11 of which are not found anywhere else on earth.

The Earlham Institute and Bangor University, as part of an international consortium of organisations, are working to characterise the genetics of tilapia species in Tanzania. The larger consortium includes the Earlham Institute, Bangor University, the Swedish University of Agricultural Sciences, WorldFish, the University of Dar es Salaam, Sokoine University of Agriculture, and the Tanzanian Fisheries Research Institute. The aim is to improve aquaculture and fish production, while preserving Tanzania’s natural diversity and resources.

Farming tilapia

Tilapia are particularly suitable for aquaculture because they are able to tolerate different environments and conditions. Their growth rates are also relatively fast, and they have low system input requirements. They’re second only to carp as the world’s most frequently farmed fish.

To help harness this potential, the consortium received funding from the Swedish “Agriculture for Food Security 2030” (AgriFoSe) and the Swedish University of Agricultural Sciences. The participation of scientists from Bangor University and Earlham Institute was supported by a BBSRC award from the Global Challenges Research Fund to bring together Tanzanian scientists, fish farmers and government officers with experts from around the world.

Last year the consortium drew up a resolution to establish a National Aquaculture Development Centre in Tanzania. The centre could help triple the contribution that aquaculture makes to the economy, double the production of fish in the country by 2025 and help improve access to fish as a protein source for those most vulnerable to undernutrition.

The Ministry of Agriculture Livestock and Fisheries welcomed the centre’s input on developing new policy briefs that could help make the goals a reality.

As one of the partners the Earlham Institute, in close collaboration with Bangor University, can provide access to some of the most advanced sequencing technology in the world and training in how to apply it. This technology allows for the rapid identification of tilapia species that are responsible for traits of commercial importance, such as good growth rate and efficient use of feed.

The insitute can help characterise the diversity of wild tilapia species found in the country’s lakes, rivers, dams and wetlands. This analysis helps to identify which species have valuable traits for developing new breeding stock.

By developing broodstock from native tilapia, Tanzania has the potential to develop an independent industry. This would be based on its own supply of fingerlings (young fish), rather than relying solely on non-native species. In the 1980s Oreochromis niloticus (Nile tilapia) and Lates niloticus (Nile perch) were introduced to boost fisheries in Lake Victoria. Indigenous tilapia species declined to extremely low levels or vanished from the lake altogether.

A Tanzanian aquaculture seed bank could be valuable for breeders worldwide, for example by offering strains adapted to harsh environments.

New smartphone app

With Bangor University and software development partners Geosho, we are also developing a new way to track invasive species. A new smartphone app, “TilapiaMap”, can be used to help identify tilapia species in the field and map the distribution of recorded species. It could help highlight regions rich in pure species, where conservation measures could be put in place. It could also flag regions with a high number of hybrids that pose a biosecurity risk.

In this way, we hope to help preserve the natural biodiversity on which an independent industry could be built. This could make a real contribution to food security and could continue to supply novel traits for breeding into the future.

Federica Di Palma, Director of Science, Earlham Institute

This article was originally published on The Conversation. Read the original article.

  1. Opinions and Analysis

Calender

« September 2017 »
Mon Tue Wed Thu Fri Sat Sun
        1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30