5 March 2018

Tanzania: Buzwagi Mine Calls Off Auction

Kahama — Buzwagi Mine has postponed the auctioning of its machinery and other equipment, which was scheduled for today, over confusion in the process of shutting down the mine.

The permanent secretary in the Ministry of Minerals, Prof Simon Msanjila, said that the announcement which was initially made by the company had not been communicated to the government, which he said was contrary to laid down procedures.

"Buzwagi visited our offices and were asked several questions on their planned auction, but they failed to provide answers. In short, they disregarded protocol," the official said.

As opposed to other sectors, Prof Msanjila clarified, the process of closing down mines requires the investor to report to the government the motivation behind such closure.

"They have conceded that the person who was charged with preparing the announcement made the mistake of releasing it prematurely. We have ordered them to present the correct announcement," said the permanent secretary.

Shinyanga regional commissioner Zainabu Tellack confirmed the postponement saying: "It is true that the auction, which had been scheduled for March 5, has been postponed."

The mine, which is located in Kahama District in Shinyanga Region, is owned by mining giant Acacia that is currently in talks with the government over allegations of tax evasion that is said to have spanned the whole period that the company has operated in the country, stretching over two decades. Acacia is accused of evading tax, which when compounded with interest and penalties is estimated at over Sh425 trillion. In the initial talks between the government and Barrick Gold mine, Acacia's parent company, the firm agreed to pay Sh700 billion.

Reports from within Buzwagi indicate that the auction has been halted due to a huge debt that the company owes, including to local authorities.

Kahama district director Anderson Msumba said his authority is owed by the miner Sh9 billion, accruing from service tax stretching back to its establishment, whereby it was required to pay Sh200 million annually before further making a 0.3 per cent payment of its income. "I went to the mines with the RC and found out that the auction had been postponed," Mr Msumba said.

According to advertisements appearing in the media, Buzwagi was set to auction machinery, vehicles and other mine equipment as preparation for its eventual closure in 2020 over increasing losses.

Buzwagi communications officer Blandina Munghezi declined to speak on the matter, saying: "I have heard of the reports but I'm unable to comment as I'm currently on vacation," she said. However, Joseph Mambia from Harvest Tanzania, which was to run the process, confirmed postponement of the auction, saying they were currently informing potential participants of the latest developments.

He said participants from Dubai, Oman, the Democratic Republic of Congo, among others, had availed themselves for the auction but after the postponement they were only allowed to inspect the assets intended for sale and leave.

Mr Mambia revealed that some participants were threatening to sue the auctioneer over expenses they incurred when readying for the auction.

Some of the requirements for viewing the items for auction included paying Sh100,000 inspection fees at the mine's gate from March 2 to 4. Prospective buyers were also required to make a down payment equivalent to 10 per cent of the cost of the item on sale.

Following the postponement of the auction, Harvest Tanzania which had teamed up with Slattery Auctions from Australia, have published the new development on their websites.

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