Acacia Mining to begin paying higher royalty to Tanzanian government

Acacia Mining will begin paying a higher royalty to the Tanzanian government for its production of gold and copper of 6%, up from 4%, after new mining regulations were drawn up following an export dispute.

The FTSE 250 miner will also pay a further 1% clearing fee on exports, which was also recently imposed by the east African state.

As well as lifting royalty rates for mineral exports the new legislation stipulates that the government shall be "entitled to reject the valuation” in relation to the calculation of royalties, and “where the government rejects the valuation, it shall have the option to buy the minerals at the low value”.

Tanzania's parliament voted through three new mining industry bills earlier this month, with Acacia confirming parts of the legislation are now in force and being applied by Tanzanian authorities.

Other parts of the new legislation allow the government to renegotiate and dissolve contracts, as President John Magufuli's government looks to take what it sees as a fairer share of profits from its mining sector, of which Acacia is the biggest player.

The dispute first came to public awareness at the beginning of March, when Acacia was banned from exporting its gold and copper concentrate, before escalating with accusation that the company was under-declaring its gold shipments and later that it was "mining illegally" in the country.

One of the new laws voted for in parliament calls for Tanzania's government to be entitled to a non-dilutable free-carried interest in mining companies of at least 16%, rising up to a 50% interest “commensurate with the total tax expenditures incurred by the government in favour of the mining company”.