Acacia Mining to comply with Tanzania's 6% royalty tax rule
UK-based Acacia Mining has opted to pay the increased royalty rate of 6% in line with the new mine legislation in Tanzania, despite the company assessing the full impact of changes.
The recently enacted mining reform received presidential consent, and allows the state to renegotiate contract terms with companies, allowing the government to have at least a 16% stake in projects.
Acacia also agreed to comply with the requirement of 1% clearing fee on exports, as it wants to avoid disruptions to operations.
Earlier this month, the miner’s majority stakeholder Barrick Gold initiated an arbitration process over the Bulyanhulu and Buzwagi mines with the Tanzanian Government towards conflict resolution.
The settlement process started after the government accused Acacia of evading tens of billions of dollars in taxes by under-reporting revenue from three Tanzania assets, which are Bulyanhulu, Buzwagi, and North Mara.
Export of mineral concentrate from the company’s operations was banned.
The decision of the government to overhaul mining rules has provoked strong responses from the industry.
Walkabout Resources noted that the new amendments to the Mining Act 2010 will impact foreign investment in the country. It also indicated that the project economics of its operations will take a hit in the face of changes.
Separately, South African company AngloGold Ashanti has started arbitration proceedings against the government in relation to the new mining policy.
Image: Operations at Bulyanhulu mine. Photo: courtesy of Acacia Mining.