Dar es Salaam — The record $190 billion (Sh424 trillion) tax bill that the government slapped Acacia Mining with might paint Tanzania as an unreliable and unpredictable investment destination, stakeholders have warned.
The sooner the two parties--the government and the mining firm--resolve their disputes through win-win negotiations the better, others have added.
Acacia Mining, which has now a long-standing dispute with the government over exports of metallic mineral concentrates, has rejected the bill that is 190 times its annual revenue as unrealistic.
The bill covers the periods of 2000 to 2017 for Bulyanhulu Gold Mine Ltd and 2007 to 2017 for Pangea Minerals Ltd. The two companies are owned by Acacia Mining.
"Doing business in Tanzania is much more expensive than going to the moon. Maybe the government of Tanzania is planning a space programme with the Acacia billions," Mr John Menzies, the chairman of the Australia-based mining consultancy CMI Capital Ltd, wrote in his LinkedIn page. "That is 10 times the budget for Nasa," he added.
The National Aeronautics and Space Administration (Nasa) is a United States government agency that is responsible for science and technology related to air and space.
The government slapped Acacia the huge tax bill amidst plans to initiate talks with Barrick Gold Corporation, the parent firm of Acacia Mining.
Negotiations have failed to kick off and President John Magufuli has warned of closing the mines if Barrick fails to show up for negotiations.
Acacia, formerly known as Africa Barrick Gold, owns Buzwagi Gold Mine, Bulyanhulu Gold Mine and North Mara Gold Mine.
"The Tanzania Revenue Authority has submitted its estimates. Acacia should also bring its side of the story and then from there let the two sides engage in meaningful discussions to defuse the tension. Otherwise, the current situation may scare foreign investors," said Silas Olang' Tanzania manager for the Natural Resource Governance Institute.
The tax bill is the result of audit investigations conducted by two presidential committees and which concluded that Acacia has been under-declaring the value of mineral contained in mineral concentrates that it exports.
"Acacia should now make sure that the planned negotiations between Barrick and the government start as early as possible to resolve the problem," said Tanzania Private Sector Foundation (TPSF) executive director Godfrey Simbeye.
"The amount is too huge to pay and may be unrealistic. Mind you, some investors are describing the issue as an ugly picture of Tanzania's investment climate - especially political risks," he added. By yesterday evening Acacia Mining shairs at the London Stock Market had plummeted considerably following the news of the record tax bill.