5 June 2017

Tanzania: Just How Much Gold Does Tanzania Have?

Photo: Agnico-Eagle - Agnico-Eagle Mines Limited/Wikipedia
Gold is commonly formed into bars for use in monetary exchange.

The question of how much gold mining firms are taking out of Tanzania, and whether the country is getting its fair share of revenues, continued to draw divided opinion.

This after a committee appointed by President John Magufuli released a report with shocking findings.

To critics of the mining firms the committee, which found that the actual quantities of gold in gold-copper concentrate impounded in Dar es Salaam were way more than the declared figures, vindicates them for their long-held view that the firms are plundering the country's vast mineral resources, thanks to the contracts signed during the second, third and fourth regimes.

However, those of a contrary view question the accuracy of the data and dismiss the "unending probes" into the industry as "political drama aimed at gaining political mileage ahead of the 2020 general election."

For almost a decade, mining is one of the key sectors that shape politics and elections, especially in Lake Zone, which is the basket of almost 50 per cent of the votes.

Tanzania's five major gold mines are located in Lake Victoria gold belt, in the Lake Zone.

Two probe committees formed by President Magufuli so far, bring the total number of probes since 2004 to seven.

Yet, seven probes and dozens of recommendations later, the controversy is far from over.

One man says he is prepared to write the new chapter by making foreign mining firms pay Tanzania its fair share of earnings from gold.

That man is President Magufuli, who is now waiting for the second report before making what he termed last week as further major decisions that would determine the future of country's mining sector.

Leading gold producer

If the data presented by the committee chaired by the chief executive officer of Geological Survey of Tanzania, a government-owned agency, Prof Abdul Kadir Mruma is to be believed, then Tanzania could as well be among the leading gold producers in the world.

The committee established that each container of the 227 carried a minimum of 28.1 kilogrammes of gold. This makes a total of 7,800kg (7.8 tonnes) of gold. Acacia produces and exports an average of 4,000 containers a year, or 333 containers each month.

From the committee's findings, it would mean Acacia exports 111.88 metric tonnes of gold annually from its two goldmines, Buzwagi and Bulyanhulu, located in Kahama Town, in the Lake Victoria gold belt.

In geological terms, this is equivalent to 1,500,000 ounces of gold valued at $1.89 billion a year, according to the current market price, which averages $1,260 per ounce.

Because of the nature of the rocks formation at Bulyanhulu and Buzwagi, 50 per cent of gold is recovered at the mining site, while the rest is extracted from the gold-copper concentrate ores -- a business done abroad because there is no smelting facility in all Africa.

Basing on the findings by committee, if 50 per cent of gold ores which contain copper and silver produce 111.88 tonnes, it means Buzwagi and Bulyanhulu might be producing 223 metric tonnes of gold a year, the highest in Africa and enough to put Tanzania on the map of global gold producers.

China has been the leader in annual gold production, averaging 450 metric tonnes a year, followed by Australia with the capacity of 270 metric tonnes, according to 2016 data released by the World Gold Council.

In Africa the only country ranked, at position nine among the top 10 gold producers is South Africa, with an annual production capacity of 140 metric tonnes.

Acacia disputes findings

Acacia has disputed the data, calling for an independent team to analyse the very same samples by an internationally-accredited laboratory.

According to statement by Acacia's chief executive officer Brad Gordon the company's verified data shows that the 277 containers at Dar es Salaam port contain 26,000 ounces of gold in total, meaning each container has an average of 3 kg (100 ounces) of gold, 3 kg of silver and 3,000 kg of copper.

"The Committee's findings were that the gold content of these containers, which represent one month's production, totalled 7.8 tonnes (or 250,000 ounces).

In 2016, Acacia produced and sold 250,000 ounces of gold in concentrate from these two mines that whole year," reads Gordon's statement posted on the company's website. Acacia owns and operates three gold mines, which are North Mara, Buzwagi and Bulyanhulu.

North Mara does not produce gold-copper concentrate ore.

The London-listed company declared that in 2016, the three gold mines produced and exported a total of 829,705 ounces of gold, the highest it has ever achieved, according to a financial report released by Acacia this year and posted on its website.

Financially, Acacia posted gross revenues of $1.054 billion below $1.89 billion, which it was supposed to have declared, according to data released by the committee.According to the Mining Act of 2010, the government tax is set at 4 per cent royalties of the value of all exported gold, regardless of whether the company has posted loss or profit.

So, how big are Tanzania's gold deposits?According to a report by another presidential mining probe committee chaired by Judge Mark Bomani, Tanzania has both proven and probable reserves of 2,222 metric tonnes of gold. Though the report was released eight years ago, no major recovery has taken place in Tanzania.

In geological terms, proven gold reserves means the gold in the ground exists and is commercially viable for mining, while probable means they think gold is in the ground but its commercial viability is not yet proved.

Using the data released last week by the Prof Mruma-led team, for the past ten years alone, Acacia might have exported 50 per cent of the total gold deposits available in Tanzania, at an average of 112 tonnes of a gold a year.

Anglo-Gold AshantiApart from Acacia, there is also another giant called Anglo-Gold Ashanti which has been producing gold since 2000 with a capacity to produce up to 480,000 ounces of gold. However, unlike Acacia, Geita Gold Mine does not produce any gold-copper concentrate ore because of the nature of the rock formation in the area.

Available data shows that Acacia has been exporting gold-copper concentrate ore since 2002.

So if the total gold production at both Acacia and Geita is combined for the past 16 years, based on the figure released by the Prof Mruma-led committee, the two mines must have mined and exported almost 70 per cent of the proven and probable gold reserves in Tanzania.

Opposition whip and MP, Tundu Lissu who for years fought the large-scale mining sector in Tanzania, calling out plunder of natural resources sees the probe as a political gimmick that could end up hurting the country legally.

"All these contracts were signed and endorsed by the government, which the current President has been part of it for 20 years when he served as MP and Cabinet minister... we shouldn't forget that these foreign firms are here legally and, therefore, any unguided political move would cost this nation dearly in future." says Mr Lissu who is also president of Tanganyika Law Society.

Mr Lissu authored the famous report titled, Robbing the Poor to Give to the Rich: The Case for Tanzania Mining Sector, which detailed how the repealed the Mining Act of 1998 paved the way for the looting of the country's vast mineral resources during the Benjamin Mkapa regime.

More on This

Mining Saga - Lobbyists Seek Sweeping Changes in Law

Tanzania should review its Constitution to place the control of its rich mineral resources in the hands of the people,… Read more »

Copyright © 2017 The East African. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 900 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.