The Tanzanian government has demanded $190bn in unpaid taxes from Acacia Mining following two rounds of audits of the company.
Just a year ago, Acacia Mining was valued at $2.2bn.
Tanzania’s president John Magufuli has accused the mining company of deliberately understating its gold exports to avoid paying royalties and other taxes.
However, an Acacia Mining spokesman denied any wrongdoing in a statement:
Acacia is a law abiding company that has always declared all materials it has produced and paid all royalties and taxes that are due.
The London listed gold company’s stock price has been tumbling amid growing tension with the Tanzanian authorities.
At the close of trading on Tuesday, its shares were down 21 percent after hitting a 17-month low, not helped by the Tanzanian government’s ban on gold and copper concentrate exports, introduced in March.
The legislation, according to Acacia, will disrupt the company’s ability to conduct future business in Tanzania.
Acacia, which operates three gold mines in Tanzania across Bulyanhulu, Buzwagi and North Mara said in a statement:
The security of the 36,200 indirect and induced jobs that rely on Acacia’s mining operations, as well as the company’s ability to invest in education, infrastructure and health projects will all be under threat.
Paul Robinson, a director at CRU Group, a London-based consultancy specialising in commodity analysis told Verdict:
Tanzania is an important top 5 African gold producer and CRU expects the country’s total gold production to exceed 1.4 m oz in 2017. CRU does not expect Acacia Mining’s ongoing disagreements with the Tanzanian authorities to impact 2017 production levels, although this assumes a solution to concentrate exports will be found.
“However, whilst this uncertainty continues, it will be difficult for the Tanzanian authorities to attract foreign direct investment (FDI) into the mining sector,” he warned.
Free download worth over $5000Download our 2019 Technology, Media and Telecoms Predictions Report
In this report, we look at the 30 big tech themes for 2019, identifying winners and losers for each theme. This report will impact all industries helping:
- CEOs/Senior Staff: in all industries understand the disruptive threats to their competitive landscape
- Investors: Helps fund managers focus their time on the most interesting investment opportunities in global TM