March 8, 2019 / 6:22 AM / 6 months ago

Tanzania orders cleanup at Acacia gold mine, threatens closure

DAR ES SALAAM (Reuters) - Acacia Mining Plc must halt waste water pollution at its North Mara gold mine in Tanzania by March 30 or the facility will be shut down, the country’s mining minister said on Friday.

Doto Biteko said Acacia needs to stop contaminated water seeping from a waste storage dam at the mine to nearby communities in the country’s north.

“The life of even one Tanzanian is worth more than their gold mining activities,” Biteko told Reuters.

Acacia Mining said it had stopped a temporary overspill at the mine, blaming vandals for destroying sections of the pipe it uses to move waste water.

“The mine has undertaken to manage all seepage through the use of additional pumps and construction of other containment facilities,” it said in a statement.

The mine has been flagged by the chief executive of Barrick Gold, Acacia’s majority shareholder, as a possible “tier 1” asset, meaning it is low cost, large and has a remaining life of more than 10 years.

London stockbroker Peel Hunt described the mine as the “backbone” of Acacia’s cash flow. “We see the potential for a shutdown of the mine as a serious threat to Acacia in the near term”, the brokerage said in a note.

RBC analyst James Bell described the minister’s comments as a “potential further pressure tactic ... due to the ongoing dispute between Acacia and the government”.

North Mara is Acacia’s largest mine, producing 336,055 ounces of gold last year, comprising 65 percent of the company’s output, Acacia said in its annual report.

The mine has faced long-standing accusations of pollution, which Acacia Mining has previously denied.

Acacia’s troubles in Tanzania began after President John Magufuli, nicknamed “The Bulldozer”, swept to power in late 2015 pledging to secure a bigger share of the country’s natural resource wealth and fight corruption.

Production at the London-listed miner’s other two gold-producing mines in Tanzania - Bulyanhulu and Buzwagi - has been hampered by a ban on exports of gold and copper concentrates.

In September, Magufuli instructed the country’s environment watchdog to conduct a new probe into historical allegations of pollution at North Mara. He described a previous report that found no evidence of wrongdoing as being compromised.

Canadian miner Barrick outlined last month details of a deal it reached with the government of Tanzania to settle the disputes with Acacia, which has been excluded from the talks.

Barrick’s announcement confirms a 2017 deal that called for the creation of a Tanzanian firm to manage Acacia’s assets, a 50-50 split of economic benefits and a $300 million payment to resolve all outstanding tax claims in the East African country.

In 2017 Acacia was handed a $190 billion tax bill - about four times the country’s gross domestic product - for underreporting output, an allegation it denies.

Reporting by Fumbuka Ng'wanakilala; Additional reporting by Zandi Shabalala in London; Editing by Hereward Holland and Dale Hudson

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