Gold miner Acacia Mining says it has received a tax bill that is four times the GDP of Tanzania where it operates, affecting its performance in the stock market.
Acacia Mining’s shares fell for a sixth straight session on Tuesday in the wake of a demand for $190bn in unpaid taxes to Tanzanian authorities dating back over 10 years.
A government appointed committee unearthed claims that the London listed miner was operating illegally and had understated its gold exports.
In a quick rejoinder, Acacia said it did not believe it owed the money and reiterated that it had fully declared all revenues. “The size of the bill is staggering: The total amount is roughly 190 times Acacia’s revenue in 2016, and four times the size of Tanzania’s $47 billion annual GDP,” the firm said in a statement.
Acacia Mining share tumble
Acacia Mining’s shares closed 8.5 percent lower at 169 pence, having had more than two-thirds wiped of their value since a ban on the export of gold and copper concentrates was imposed in Tanzania on March 3.
But the miner, which is majority-owned by Canadian firm Barrick Gold, says continuation of the ban will hurt its ability to conduct future business in Tanzania, since it covers 50% of its production.
In recent days, Tanzania has witnessed sweeping changes to the country’s mining industry spearheaded by President John Magufuli who thinks the country is not benefitting from the sector.
“I have launched an economic war,” he said last week, according to Reuters. “We have asked them to come for talks … they have agreed to come. But if they delay those talks, I will close down all the mines.”
Absurdly high number
Analysts have however been sympathetic to Acacia’s case saying that $190 billion owed in tax is simply an absurdly high number which cannot be paid.
The tax bill is four times the GDP of Tanzania and is 32 times larger than Acacia’s revenue from the two of its mines over the last ten years, according to World Bank researchers.
President Magufuli has threatened to shut all gold mines in Tanzania if mining companies delayed talks to resolve the dispute over billions of dollars in back taxes the government says they owe.