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Kenya: UK Company to Survey Sh161 Billion Kakamega Gold

By Victor Juma

19th February 2018

In Summary

– The announcement is a signal that the multinational could soon join Goldplat which mines the commodity in Migori.

– At a total of 1.1 million ounces, the recoverable deposits are worth an estimated Sh160.8 billion based on the price of Sh137,430 per ounce on Friday.

– Increased gold production will diversify the country’s exports, help to fund government expenditure and shore up the local currency from dollar receipts.


Acacia Mining, a British company that has been exploring for gold in Kakamega, says it has started a survey to establish commercial viability of the deposits estimated at 1.1 million ounces of the precious metal.

The announcement is a signal that the multinational could soon join Goldplat which mines the commodity in Migori.

“The updated inferred resource estimate completed for the year-end returned … 1.044 million ounces at Isulu and for Bushiangala 126,600 ounces,” Acacia said of its Kakamega sites in a trading update.

“A technical study to determine mineability of these deposits was commenced in Q4 2017.”

At a total of 1.1 million ounces, the recoverable deposits are worth an estimated Sh160.8 billion based on the price of Sh137,430 per ounce on Friday.

The study comes after Acacia intensified exploration activities in western Kenya, which cost it $12.2 million (Sh1.2 billion) in the year ended December, up from $10.5 million (Sh1 billion) a year earlier.

The recent rally in gold prices is expected to encourage production around the world. The current price of about $1,360 per ounce, a 20-month high, represents a gain of 20 per cent from lows of $1,133 in December 2016.

Increased gold production will diversify the country’s exports, help to fund government expenditure and shore up the local currency from dollar receipts.

Acacia, for instance, paid $143 million (Sh14.4 billion) in royalties and taxes to the Tanzania government where it has some of its largest operations.

Gold exports from Kenya have, however, been sluggish so far. Goldplat’s local subsidiary Kilimapesa Gold, for instance, sold about Sh374 million worth of the precious metal in the six months ended December — boosted by increased production at its Migori plant.

Kilimapesa’s output rose 2.2 times to 2,681 ounces in the period compared to 1,190 ounces a year earlier, the multinational disclosed in regulatory filings.

The company’s gold sales rose 2.4 times to 2,720 ounces from 1,093 ounces, placing the value of the commodity sold in the review period at Sh374 million.

The royalty rate the company pays to the Kenyan government was not immediately clear but miners of other commodities are paying royalties in the low single digits.



    See also:

Tanzania: Why ‘Mother’ Barrick Gold Needs to Be Rid of ‘Daughter’ Acacia Mining?

London-listed Acacia Mining accused of “sophisticated tax evasion” in Tanzania

Mining firms sue Kenya over permits

By James Kariuki
7th February 2018


– The government said Cortec’s 21-year licence was unprocedurally issued and was against regulations.

– Dr Kiptoo said the cancellations were inspired by the need to safeguard the environment.

Global mining firms are demanding Sh334 billion from the government as compensation for cancelling their licences.

About 10 different cases have been brought to the attention of the International Centre for Settlement of Investments Disputes (ICSID) based in Dubai regarding the revocation of their exploration permits.

Trade Principal Secretary Chris Kiptoo said Kenya is actively involved in the cases and that all agreements with global firms are under review.

“There are ongoing cases at ICSID with claims amounting to Sh334bn. We have seen how vague language in investment treaties can result in massive payouts.

“Kenya has developed a model investment treaty and an investment agreements policy with clear rules and responsibilities,” he said at the 11th Annual Forum of Developing Country Investment Negotiators in Nairobi.


One of the disputes involves a Sh200 billion claim by Cortec Kenya and a Sh61.8 billion claim by WalAm Energy Inc.

The others have not been posted on the ICSID’s website.

However, other firms that have lost their licences include Sirmonet Mineral Kenya, Yongtai Mining Company, Balham Trading Company, Ololunga Mining and Industrials as well as AQ Kenya Gold Ltd.

Cortec’s prospecting licence for Niobium and rare earth at Mrima Hills in Kwale was revoked months after it obtained a National Environmental Management Authority permit and announced a Sh44 billion investment in the venture.


The government said Cortec’s 21-year licence was unprocedurally issued and was against regulations banning the exploration of minerals in a gazetted forest.

WalAm’s 30-year licence to explore for geothermal suffered a similar fate in 2012 when the Government accused it of breaching contract terms with regard to the construction of geothermal plants.

Dr Kiptoo sought to justify the licence cancellations, saying they were inspired by the need to safeguard the environment, public health, avert taxation disputes and appease communities identified for eviction to pave the way for the mining projects.


Africa: Mining Legislation in Africa Gone Back to Colonial Days

5th February 2018

Mining in Africa has reverted to the pre-independence days of colonialism in which legal regimes exist primarily to facilitate profit for mine owners, according to Dr Yao Graham, executive director of Third World Network in Ghana.

Dr Graham was speaking at the Alternative Mining Indaba, a platform for the voices of civil society and people impacted and affected by mining, in Cape Town this morning.

He pointed out that the majority of African countries opted to nationalise mineral resources at independence, a choice which vested ownership of mines in the state on behalf of the people of that country.

“Legal regimes in Africa, however, today exist primarily to facilitate the profits of mining. Laws make corporate welfare possible,” Dr Graham noted.

Decisions about how minerals are exploited should be based on how best the interests of people – those living as well as future generations – were advanced. Any policy framework should have at its heart the notion of sustainability and inter-generational equity.

All elements of community struggle can be regrouped under the concept of collective ownership of mines, Dr Graham said.

He added that it was a huge paradox that communities campaigned against this situation in fragments: “We talk about communities sharing the benefits, managing environmental benefits, workers enjoying better benefits – but these are all fragments. We have lost awareness of most important legal provision – public ownership of mineral regimes on this continent. We have not tried sufficiently to interrogate what this should mean.”

Dr Graham said that it was flawed logic to argue that the best way to share minerals is for multinationals to manage them and then share some of their profits with governments for people.

“Our ownership of minerals should mean that communities make much bigger demands for accountability. Currently, our laws are very defective in accountability, with too much left at the discretion of the authorities,” he added.

Current practice had led to a pattern of unsustainable exploitation, whereas value needed to be added by transforming minerals into other assets, so that less minerals are used, leaving sufficient for future generations.

Earlier in the morning, delegates heard about a community in Botswana that has been left bereft by the closure of a mine in 2015.

Keineetse Kealeboga Maswabi of the Mmadinare community in Selebe Phikwe told the conference that when people in the community were ordered to move in the early 1970s to make way for a mine, they welcomed it and did so without demanding any compensation.

Although services in their new location improved, they were not allocated land to own. Neither did the mine carry out an environmental assessment or establish a sustainability fund.

After the mine closed in 2015, unemployment rose and affected communities found that they had not been given certificates of rights to plough land. This certificate was now required in order for farmers to access government assistance schemes.

“The land board now treats them as squatters,” Maswabi said.

The Alternative Mining Indaba presents an alternative voice – the voice of communities – to that of corporates, governments, investors and financiers who meet yearly during the African Mining Indaba. Through effective advocacy, the AMI aims to enhance transparency and accountability in the governance of natural resources and lead to a continent that extracts minerals sustainably and distributes natural resources revenues equitably.

The objectives of the AMI are to:

– Provide a platform to empower communities affected and impacted by the extractives industries to reclaim their rights through the formulation of alternatives;
– Advocate for transparent, equitable and just extractives practices in the management, governance and distribution of national resources through policy and legislative reform;
– Create meaningful decision-making processes for communities, advocating for just national and regional policies and corporate practices;
– Provide space for engagement for the inter faith communities, governments, CSOs and private sector to share information and experiences; and
– Provide space for the inter faith community to lead and accompany affected and impacted communities.

The AMI is organised by the Economic Justice Network of the Fellowship of Christian Councils in Southern Africa (EJN of FOCCISA) in collaboration with:

Bench Marks Foundation

Christian Council of Mozambique

IANRA (International Alliance on Natural Resources in Africa)

Tax Justice Network Africa

Zimbabwe Environmental Lawyers Association (ZELA)
Publish What You Pay

Norwegian Church Aid
Mozambique Christian Council

Diakonia Zambia

Zimbabwe Council of Churches

Issued by Quo Vadis Communications on behalf of the Alternative Mining Indaba (AMI)


New Evidence of Africa’s Systematic Looting, From an Increasingly Schizophrenic World Bank

Patrick Bond

A brand new World Bank report, The Changing Wealth of Nations 2018, offers evidence of how much poorer Africa is becoming thanks to rampant minerals, oil and gas extraction. Yet Bank policies and practices remain oriented to enforcing foreign loan repayments and transnational corporate (TNC) profit repatriation, thus maintaining the looting.

Central to its “natural capital accounting,” the Bank uses an “Adjusted Net Savings” (ANS) measure for changes in economic, ecological and educational wealth. This is surely preferable to “Gross National Income” (GNI, a minor variant of Gross Domestic Product), which fails to consider depletion of non-renewable natural resources and pollution (not to mention unpaid women’s and community work).

In its latest world survey (with 1990-2015 data), the Bank concludes that Sub-Saharan Africa loses roughly $100 billion of ANS annually because it is “the only region with periods of negative levels – averaging negative 3 percent of GNI over the past decade – suggesting that its development policies are not yet sufficiently promoting sustainable economic growth…Clearly, natural resource depletion is one of the key drivers of negative ANS in the region.”

The Bank asks, “How does Sub-Saharan Africa compare to other regions? Not favorably.” Contrary to pernicious “Africa Rising” mythology, the ANS decline for Sub-Saharan Africa was worst from 2001-09 and 2013-15.

Other regions of the world scored strongly positive ANS increases, in the 5-25 percent range. Richer, resource-intensive countries such as Australia, Canada and Norway have positive ANS resource outcomes partly because their TNCs return profits to home-based shareholders.

Africa’s smash-and-grab ‘development policies’ aiming to attract Foreign Direct Investment have, even the Bank suggests, now become counter-productive: “Especially for resource-rich countries, the depletion of natural resources is often not compensated for by other investments. The warnings provided by negative ANS in many countries and in the region as a whole should not be ignored.”

Such warnings – including the 2012 Gaborone Declaration by ten African governments – are indeed being mainly ignored, and for a simple reason, the Bank hints: “The [ANS] measure remains very important, especially in resource-rich countries. It helps in advocating for investments toward diversification to promote exports and sectoral growth outside the resource sector.”

Africa desperately needs diversification, but governments of resource-cursed countries are instead excessively influenced by TNCs intent on extraction. Even within the Bank such bias is evident, as the case of Zambia shows.

Zambia’s missing copper

Last year, the Bank appointed Zambia the main pilot country study within the project “Wealth Accounting and Valuation of Ecosystem Services” (WAVES). Zambian forests, wetlands, farmland and water resources were considered the “priority accounts.” Conspicuously missing was copper, the main component of Zambia’s natural wealth.

Was copper neglected in WAVES because such accounting would show a substantial net loss? One Bank estimate of copper’s annual contribution to Zambia’s declining mineral wealth a decade ago put it at a huge 19.8 percent of GNI. Were such data widely discussed, it might compel a rethink in Zambia’s desperate privatisation of mines and export of unprocessed ore.

Naturally most World Bank staff work not in Zambians’ interests, but on behalf of other international banks and TNCs. This compels them to squeeze Zambia’s scarce foreign exchange: first, so TNCs can take profits home, and second, so Lusaka repays loans no matter how unaffordable and no matter how corrupt the borrowing government. Repayment is now especially difficult given that the kwacha declined from a level around 1 to the US$ in the 1990s to around 5 to the US$ from 2003-15, to the 9-12/US$ range since.

From 2002-08, the Zambian government led by Levy Mwanamasa (1948-2008) came under severe pressure from the World Bank to sell the most valuable state assets to repay older loans, including those taken out by his corrupt predecessor, Frederick Chiluba (1943-2011). That debt should have been repudiated and cancelled.

Even then, when selling Africa’s largest copper mine at Konkola, Mwanamasa should have ensured at least $400 million went into Zambia’s treasury. But the buyer, Vedanta chief executive Anil Agarwal, laughed wickedly when bragging to a 2014 investment conference in Bangalore, India, that he tricked Mwanawasa into accepting only $25 million. “It’s been nine years and since then every year it is giving us a minimum of $500 million to $1 billion.” (Agarwal is now in the process of buying Anglo American’s South African mining assets, having purchased 20 percent of the firm in 2016-17.)

Against the looting of Africa: top-down or bottom-up?

Zambia is not alone. The Bank reports that from 1990-2015 many African countries suffered massive ANS shrinkage (a process termed ‘dissaving’ as a polite substitute for ‘looting’), including Angola (68 percent), the Republic of the Congo (49 percent) and Equatorial Guinea (39 percent). As commodity prices peaked in the 2007-14 super-cycle period, resource depletion was the major factor for Africa’s wealth shrinkage.

What can be done? There are really only two ways to address TNC capture of African wealth: bottom-up through direct action blocking extraction, or top-down through reforms.

The futility of the latter is exemplified by the African Union’s 2009 Alternative Mining Vision (AMV). It proclaims (without any reference to natural resource depletion capital accounting), “arguably the most important vehicle for building local capital are the foreign resource investors – TNCs – who have the requisite capital, skills and expertise”

South African activist Chris Rutledge opposed this neoliberal logic last year in an ActionAid report, The AMV: Are we repackaging a colonial paradigm?: “By ramping up models of maximum extraction, the AMV once again stands in direct opposition to our own priorities to ensure resilient livelihoods and securing climate justice. It is downright opposed to any type of Free Prior and Informed Consent. And it does not address the structural causes of structural violence experienced by women, girls and affected communities.”

The first strategy – community-based opposition – could be far more effective. According to a pamphlet prepared by Johannesburg faith-based mining watchdog Bench Marks Foundation for the civil society Alternative Mining Indaba in Cape Town this week, “Intractable conflicts of interest prevail with ongoing interruptions to mining operations. Resistance to mining operations is steadily on the increase along with the associated conflict.”

The Alternative Indaba’s challenge is to embrace this resistance, not retreat into reformist NGO silos – and not continue to ignore mining’s adverse impact on energy security, climate and resource depletion as it often has.

Indeed, three years ago, Anglo American CEO Mark Cutifani conceded that due to community protests, “There’s something like $25 billion worth of projects tied up or stopped,” a stunning feat given that all new mines across the world were valued that year at $80 billion. (A map of these can be found at the Environmental Justice Atlas,

Meanwhile, the World Bank’s lending staffers (distinct from the Changing Wealth of Nations researchers) are still subject to protests over mining here. Women living in the Marikana slums, organised as Sikhala Sonke, remain disgusted by the $150 million financing commitment made to Lonmin, which from 2007-12 the Bank bizarrely considered its ‘best case’ for community investment – until the police massacre of 34 workers there during a wildcat strike. (Bank president Jim Yong Kim even visited Johannesburg two weeks after that, but didn’t dare mention much less visit his institution’s ‘best case’ mining stake.)

The Bank’s other notorious South Africa operations included generous credits to the apartheid regime, relentless promotion of neoliberal ideology after 1990, a corrupt $3.75 billion Eskom loan in 2010 (the largest-ever Bank project loan, which still funds the most polluting coal-fired power plant under construction anywhere in the world), and ongoing lead-shareholder investments in the CPS-Net1 rip-offs of South Africa’s 11 million poorest citizens who receive social grants.

To top it all off, in spite of the embarrassing revelations about TNC exploitation unmistakeable in The Changing Wealth of Nations 2018, the Bank is a financial sponsor of this week’s African Mining Indaba at the Cape Town convention centre. Each year, it’s the place to break bread and sip fine Stellenbosch wines (though perhaps not water in this climate-catastrophic city) with the world’s most aggressive mining bosses and allied African political elites, conferring jovially about how to amplify the looting.


Tanzania’s Mining Firms Have Three Months to Comply With Law

By Beatrice Materu
23rd January 2018

In summary:

– New guidelines pushed for the mandatory listing of mining companies on the DSE by August last year as part of measures aimed at increasing transparency and sharing out wealth from the country’s natural resources.

– The rules give the government the right to oversee the implementation of these regulations, evaluate and review contracts as see fit.

– President John Magufuli has previously complained that the country is not benefiting as it should from its resources.

Tanzania is set to restructure its troubled mining sector after the government gave mining companies three months to comply with new guidelines, which give local mining firms and financial institutions preference.

Part of the regulations state:

“A contractor, subcontractor, licensee or other allied entity shall before the commencement of mining activities submit a plan to the Commission specifying the role and responsibilities of the indigenous Tanzanian company; the equity participation of the indigenous Tanzanian company; and the strategy for the transfer of technology and know-how to the indigenous Tanzanian company,”

“Mining companies will have to open and operate bank accounts in a “100 per cent” Tanzanian-owned banks.

The rules give the government the right to oversee the implementation of these regulations, evaluate and review contracts as see fit.

President John Magufuli has previously complained that the country is not benefiting as it should from its resources.

New laws

Mid last year, Tanzania’s parliament pushed for new laws on its extractives industry: The Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Bill, 2017; the Natural Wealth and Resources (Permanent Sovereignty) Bill, 2017; and, the Written Laws (Miscellaneous Amendments) Act, 2017.

The new guidelines pushed for the mandatory listing of mining companies on the Dar es Salaam Stock Exchange by August last year as part of measures aimed at increasing transparency and sharing out wealth from the country’s natural resources.

President Magufuli signed the Mining Act in July last year and it requires the government to own at least a 16 per cent stake in mining activities. The troubled mining sector generates about 3.5 per cent of the country’s GDP.

The government accused gold mining company Acacia, of tax evasion and under-declaring amount and types of minerals exported. The government banned it from exporting gold/copper concentrates, which account for over 50 per cent of the company’s operations.

Other major foreign-owned mining companies that will be affected by the new legal regulations on local content include the South African AngloGold Ashanti and British mining company Petra Diamonds.


Brazil: Gold mine case bolsters Indigenous rights in Brazil. In a political climate widely seen to privilege industry, decision to uphold the suspension of a Canadian miner’s licence is a tidal shift

The Globe and Mail
18 Dec 2017


A Brazilian appeals court has upheld the suspension of a key licence for Toronto-based Belo Sun Mining Corp., which hopes to build Brazil’s largest open-pit gold mine in the Amazon forest. The decision sets the project back at least a year, and in their ruling, the three-judge tribunal blasted the company for failing to consult Indigenous people sufficiently.

The precedent-setting ruling serves to shore up the rights of Brazil’s First Nations, rights that are, in principle, constitutionally protected, but in practice often ignored in the development of infrastructure and commercial projects. It comes at a time when the political climate strongly favours the mining industry.

The decision, delivered on Dec. 6 by the Federal Tribunal of the First Region, in Brasilia, upholds an April suspension order for the company’s installation licence. The tribunal said that Belo Sun had failed to fulfill obligations, repeatedly made clear after previous court challenges, to study the impact of their planned 175,443-hectare open-pit mine on the Juruna people, who live approximately 10 kilometres downriver from the site of the Volta Grande project, and must do so according to a “consultation protocol” laid out by the Juruna themselves.

“This is a very important decision, not just for Belo Sun – it tells all Brazil that Indigenous people have to be consulted on projects, public or private,” said Ubiratan Cazetta, one of the federal prosecutors who brought the case.

Ian Pritchard, Belo Sun’s chief operating officer, said the company has not made a decision about whether to appeal and that their “current focus is to complete the work with the government agencies.” He added that the company would not comment on the decision, saying only that “the Para government and local municipalities have been very supportive of our company and the Volta Grande Project.”

The mine, called Volta Grande, is located on a 2,000-km tributary of the Amazon River called the Xingu, in the state of Para. The state has vast mineral riches, but one of Brazil’s lowest standards of living and has wooed national and international mining companies, promising to smooth the path of bureaucracy and licensing. The municipality that is home to the mine has also welcomed its promise of 500 jobs and a big bump in tax revenue. Federal agencies – particularly those responsible for environmental and Indigenous affairs – have been less positive.

“Belo Sun weren’t expecting this result – they believe our institutions don’t work,” Mr. Cazetta said. “They have this discourse about how, ‘We are making things better for these people; the Indigenous are so poor and we are bringing progress,’ that they think will convince everybody, and then they will be allowed to do whatever they want. But we are in a different moment in Brazil.”

In a report on the ruling for CIBC World Markets Inc., analysts Jeff Killeen and Daniel Gavin called it a “negative event for the project” and said “the timing for a resolution is unknown.”

The tribunal ruling contains a landmark instruction for Belo Sun to follow the consultation protocol defined by the Juruna people. In it, they define themselves as the “guardians of the Xingu,” who have survived centuries of incursion on their way of life in the name of development. They insist they must be consulted “in good faith and honestly” about projects that will affect them, on their terms – at meetings held on their timetable, in their community, with the participation of children, adults and the elderly, with decisions to be reached by consensus, after as many consultations as it takes to answer all their questions.

The ruling obliges Belo Sun to redo studies of possible impacts on the Juruna and Arara peoples, who say their lands are located 9.5 km and 13.7 km, respectively, from the mine site. The company has repeatedly argued that the nearest Indigenous territory is 11 km from the mine, and so outside a 10-km radius of impact established by federal law.

Mr. Cazetta said the judges on the tribunal were not interested in haggling over whether the mine is 9km or 11 km away from the Indigenous land. “They said, ‘Let’s be serious, your project puts pressure on them; it’s easy to see this.’”

In addition, the mine is 13 km downriver from the massive Belo Monte hydroelectric project, which has been the site of one of the uglier conflicts between Brazil and its Indigenous people. Brazil’s supreme court allowed construction of the dam, which will flood more than 500 square km of land, despite the fact that it was bitterly opposed by First Nations groups who live in the area and who were never consulted.

The dam has already drastically changed water levels and the behaviour of the Xingu river on the Juruna territory and it will be at least another seven years before its full impact is known, said Biviany Rojas, a lawyer for the Socio-Environment Institute, a non-government organization that has been supporting the Indigenous people in their fight against Belo Sun.

That was one factor the judges considered when they ordered broader consultations. A second issue, in the background, was the Samarco mine disaster in southeastern Brazil two years ago, where an open-pit tailings dam collapsed, killing 19 people, destroying a town and releasing a tide of toxic sludge whose reach extended hundreds of kilometres. In the post-Samarco context, Ms. Rojas said, an argument over whether a mine is 9 km or 11 km away from an Indigenous community “is absurd.”

Marcelo Ribeiro Tunes, a director with the Brazil Mining Association, an industry lobby group, said that he believes Belo Sun must appeal the ruling to the Supreme Court. “Our feeling is [the tribunal judges] are overreaching their authority and the spirit of the law – tomorrow, they will say the distance [within which a mine is responsible for impact] is 20 km, then they will say 100 km.”

The mining industry has been enjoying a warm relationship with government since Brazilian President Michel Temer took power 16 months ago. Two new bills, one of which reduces royalty levels and another which relaxes regulatory procedures, are expected to become law as early as next week. Mr. Temer has called the moves necessary to spur foreign investment and help revive Brazil’s economy, which is emerging from one of the worst recessions in nearly a century. In August, he introduced legislation to permit mining in a 28,700-square-kilometre reserve (about the size of Denmark) called Renca, in the northeastern Amazon. He was forced to withdraw the proposal after a global outcry, but another five million hectares of the rain forest are the subject of bills before congress seeking to change their protected status to allow mining.

Mr. Tunes said the licensing situation remains complex: By local standards, Belo Sun has had a comparatively fast process, he said with a laugh. But he does not believe this tribunal ruling will dampen prospects to expand the industry. “If you have a new project, you may think twice about coming in,” he said. “But if you have a very good mining deposit, you will take the risk.”

In the Amazon region itself, public opinion of mining is split between people who fear the environmental impact, including the deforestation that accompanies the mines, and those who see them as vital economic progress. While the federal government clearly supports the pro-development view, courts are increasingly ruling in favour of Indigenous peoples. Canadian-owned Brazil Potash Corp., for example, lost its licence for a mine in Amazonas state in July, 2016, when a court ruled it had not sufficiently consulted Indigenous people in the area.
In a bizarre incident in late November, a group of academics meeting at the Federal University of Para, in the state capital of Belem, to discuss the potential impacts of Belo Sun’s project were locked in a hall by the mayor of the municipality where the mine is located and a group of about 40 mine supporters. Those who were detained – for about 40 minutes – have filed a complaint with federal prosecutors, saying the mayor threatened them with violence.


Tanzania: Who Should Shoulder the Blame for Rot in Mining?

23 NOVEMBER 2016
The Citizen (Dar es Salaam)

By Kelvin Matandiko

Dar es Salaam — Tanzania, sitting on a fortune of gold, diamonds and a vast of other much-sought-after minerals, is still listed among the ‘wretched of the earth’ – one of the poorest countries of the Third World. What exactly is to blame for this tragedy?

There is no one single answer to the question. According to analysts, years of bad policies and dubious mining contracts significantly contributed to the catastrophe.

But after the liberalisation of the economy, in came some “sly” investors, who have been accused of looting while giving “lame excuses” of a difficult operating environment in the country.

A few months ago, President John Magufuli read the riot act to the mostly foreign-owned mining companies operating in Tanzania — Africa’s fourth gold producer. Dr Magufuli ordered them to pack and their bags and leave if they were genuinely, perennially making losses.

And addressing a press conference at State House early this month, he expressed his disappointment again over the poor contribution of the mining sector to the national economy.

“Tanzania has a lot of minerals, but there have been a lot of funny deals…we have to look carefully at our laws so that we move forward as a country,” Dr Magufuli said in Dar es Salaam. He became the latest most senior person to express concerns over the contribution that multinational companies are making to the national economy after years of gold digging.

During a meeting with employees of the Bank of Tanzania (BoT) and the Ministry of Finance and Planning, Dr Magufuli decried the plethora of problems bedeviling mining suggesting that it was one of the most troubled and underperforming sectors in the country.

His beef with most of the mining companies in Tanzania is over their alleged failure to meet their end of their bargain in paying corporate taxes.

Tax evasion, corruption and mismanagement of the country’s natural resources have been at the core of the President’s agenda since he came to power last year.

He said the government recently approved new mining regulations aimed at ensuring that the benefits of the mining sector are shared more equitably between multinational mining companies and the state.

In recent years, some companies have also been at loggerheads with local government authorities accusing them of not being honest in declaring royalties.

The government passed a mining law in 2010 that increased the royalty paid on minerals like gold from 3 per cent to 4 per cent. It also required the government to own a stake in future mining projects.

The Mining Act requires mining firms to list on the Dar es Salaam Stock Exchange (DSE) and in September the government approved regulations to enforce that law.

Some companies cite falling global prices as one the major challenges they have been facing.

Gold exports alone earned Tanzania $1.27 billion in 2015, down from $1.32 billion the previous year, largely due to a fall in global commodity prices and output.

Mining analysts say the country has not fully benefitted from its resources mainly because of poor contracts and bad laws. There is also the question of transparency – some companies are said to be falsifying production and profit figures.

On the lack of transparency and disclosure of the mining companies, President Magufuli has said that some of gold mines operating in the country have private airstrips. The authorities were not able to monitor what the mining companies planes were transporting from the gold mines, out of Tanzania, he said.

Some major mining companies in Tanzania, including Acacia Mining Plc (previously known as African Barrick Gold), which has three gold-producing mines, reported losses early this year.

Acacia declared a net loss of $52 million (Sh104 billion) in the first quarter of this year after setting aside $70 million to settle an historic tax bill from the government.

The Tax Revenue Appeals Tribunal recently found the multinational company in tax arrears, and accused it of engaging in a “sophisticated scheme of tax evasion” since 2010.

The tribunal ruled that the mining firm failed to pay taxes while still paying more than $400 million in dividends to its shareholders from its gold-mining profits in the country. Mr Deo Mwanyika, vice president of North Mara Gold, Acacia’s Tarime-based mine, says due to the huge capital required to start the mine, it had been a challenge for the investors to break even.

“It was capital intensive, and there were various purchases to be made to expand production. So, since we started in 2003/04 till last year, it has been about recovering costs,” he said.

In January, this year, Williamson Diamond Mine was quoted by a local daily as claiming that its sales had declined by 18 per cent, despite a four per cent increase in the value of carats.

President Magufuli’s frustration over reports of losses by mining firms came as a little surprise. It remains to be seen how his administration, which has given the impression that it will leave no stone unturned in dealing with tax evasion, is going to tread this sensitive road.

A 2008 mining report revealed how the country was losing large amounts of money from foreign investment in the sector due to low royalty rates and generous tax exemptions.

The report published by a consortium of church-based groups exposed how contracts with so-called stabilisation clauses have locked the government into this tax regime for up to 50 years.

A Golden Opportunity? How Tanzania is Failing to Benefit From Gold Mining was commissioned by the Christian Council of Tanzania, the National Council of Muslims in Tanzania, the Tanzania Episcopal Conference, and financed by Norwegian Church Aid and Christian Aid.

“Gold mining is the fastest growing sector of Tanzania’s economy…Yet ordinary Tanzanians are not benefitting from this boom both because the government has implemented tax laws that are overly favourable to multinational mining companies and because of the practices of these companies,” said the report’s authors, Mark Curtis and opposition lawyer Tundu Lissu.

Some firms dismissed the report as advocacy by anti-mining activists. They argued that Tanzania’s investment laws were not out of step with the rest of the world.

Early this year, amid growing pressure and “negative media reports” on the activities of mining firms in the country, the Tanzania Chamber of Minerals and Energy (TCME), which represents member companies involved in the sector, sought to counter claims that the country has not benefitted much.

“The government benefits directly from royalty payments of 4 or 5 per cent depending on minerals produced which is charged on gross turnover (not on profit),” TCME chairman Ami Mpungwe noted in a press statement released on 13 April, this year. He also said the country’s rural communities stood out as one of the biggest beneficiaries of mining activities.

“As a result of mines that were constructed, rural communities have had access to power and water supplies where there none, thus enabling improvement of the quality of life that prior to the arrival of investors, might have seemed unattainable in rural Tanzania.”

Still, the TCME chairman is not oblivious to the fact that the mining sector has not met the expectations of the nation.

“We needed it to be the major contributor to the national economy, but instead it’s become a case of problems and chronic challenges,” he told a press conference recently.


More Philippine miners threatened with suspension under crackdown

Published by MAC on 2016-10-27
Source: Statements, Reuters, Bloomberg, PDI, Sun Star (2016-10-27)

It has been another hectic few weeks with regard to mining in the Philippines, and the Government’s environmental crackdown. The long-awaited environmental audit from the Department of Environment and Natural Resources (DENR), headed by Gina Lopez, was finally promulgated at the end of September. (see: Philippines: President notes “Mining – My way or the environmental highway”).

It was generally greeted with cheers by civil society watch-dogs, who favourably noted the proposed suspension of almost half of the 41 operating mines (to add to the 10 already suspended). The bulk of firms affected were nickel miners, with many being in the Caraga region. However, some noted that the suspensions only involved notices that asked for set conditions to be applied, otherwise a suspension would commence. Many companies have argued they are already – or at least will be – in compliance, and how many firms will actually be suspended is open for question.

Ms Lopez has indicated her crusade will continue, promising she will place a moratorium on any new mines and ordering the investigation of alleged “midnight deals” involving some officials of her department and mining companies during the last days of the previous administration. The DENR has said it will cancel the license of another nickel miner, Austral-Asia Link Mining in Davao Oriental province, because it is next to protected areas. (Interestingly we believe this is the lease that Anglo-Australian BHP Billiton once co-owned, before withdrawing from the project).

Yet, the industry fight-back continues, with the much-expected first legal challenge to the ongoing suspension orders. The Chamber of Mines of the Philippines called the audit ‘tainted’ because of the inclusion of ‘anti-mining’ civil society groups. (Perish the thought there would be critical, or even independent, voices included!) The odd inconsistency of the DENR nominating some of the suspended companies for environmental awards has also been exposed plain. The obvious concerns around jobs have been aired, although Ms Lopez has reiterated that companies should employ workers on making good environmental failures and/or rehabilitation work.

A particular focus has been on OceanaGold, where the company has claimed to be in a “constructive” dialogue over its own suspension notice, while the local Governor of Nueva Vizcaya has called for unity in communities against the project. This is a request which seems to have been heartily welcomed, with citizen groups requesting the closure of the mine and expulsion of the company. There was also popular support for the people of El Salvador, following the ISDS case (see: OceanaGold loses compensation claim against El Salvador).

The President has continued to support his controversial minister, and talked of the need for a new ‘people-friendly’ mining law.
Outside of this main story, concerns about the human rights situation in the country continues – particularly after the killing of Jimmy Saypan, a noted anti-mining leader from the Compostela Valley. (See: Philippines: Anti-mining leader dies in hospital after gunmen attack).

Coal and climate change has also been making the news, with environmental groups continuing arguing against coal-fired power plants and mines. although President Duterte is saying the Philippines need not follow the rules of “imperialists” by abiding with the Paris Agreement on climate change.

What this will mean in practice is unclear, but – like the roller-coaster ride with regard to regulating the mining industry – it is likely to grab the headlines.


Kenya: Weak Data Buries the Shine of Kenya’s Huge Mineral Resource

25 OCTOBER 2016
The Nation (Nairobi)

By Edwin Okoth

Kenya has vast mineral deposits that remain largely unexploited as data gaps keep the country’s undiscovered underground wealth out of the economic system.

A report released on the country’s potential mineral resources show that Kenya has billions below its surface worth of minerals yet to be mapped and quantified for mining.

The Ministry of Mining, which is yet to identify a consultant expected to carry out a year-long aerial mapping of the country’s minerals said in the Kenya Mining Investment Handbook 2016 that the country’s mining potential is huge and remains unknown.

“Numerous mineral occurrences have been recorded and mapped in the country. However, no detailed exploration work has been carried out to establish the extent of most of these mineral occurrences.

Nonetheless, Kenya has numerous ores and industrial minerals, which have been established to be in substantial quantities.

These minerals include soda ash, fluorspar, titanium, niobium and rare earth elements, gold, coal, iron ore, limestone, manganese, diatomite, gemstones, gypsum and natural carbon dioxide,” the ministry wrote in the report.

Earlier this month, Kenya hosted the first mining forum where leaders pledged focus on the sector which is capable of supporting up to 10 per cent of Kenya’s Gross Domestic Product.

Mining Cabinet Secretary Dan Kazungu said 17 bidders had applied to be the consultant expected to conduct the Sh3 billion survey to map the country’s mineral locations and allow for informed marketing of the country as mining hub.

According to the report, Kenya has world class deposits of rare earth elements in the coastal region with an estimated worth of Sh6.2 trillion and these could propel the country to the list of top five nations with rare earth deposits in the world.

In addition, the country has the world’s top six deposits for Niobium with commercial deposits of coal having been discovered in the north eastern region of the country and are currently under review for potential exploitation.

Even before the survey expected to take place next year starts in western Kenya, where gold has been discovered, a number of global mining companies are already operating in the country mining millions in tonnes of ores. More are expected to join once the mapping is complete.

Tata Chemicals Magadi, which has its operation in the Lake Magadi region in the Great Rift Valley is Africa’s largest soda ash producer and one of Kenya’s leading exporters with an annual production of about 360,000 metric tonnes of Soda Ash according to the report.

Kenya Fluorspar Company Limited has been mining fluorspar for export in the Rift Valley System since 1971.

Another major mining firm, which has been around since 1942 is the Africa Diatomite Industries Limited (ADIL) exploiting diatomite in Gilgil, a town north west of Nairobi, for export.

DIL has access to good quality diatomite deposits estimated at over 6 million tonnes and currently boasts of having the only known viable quality deposits of Diatomite in Kenya.Fenxi Mining, together with a local joint venture partner, Great Lakes Corporation are currently exploiting two exploration areas where coal deposits have been identified.

The company estimates that the area holds more than 400 million tonnes of coal reserves with estimated value of Sh4 trillion.”The country is vastly underexplored for minerals and its mining sector is currently dominated by the production of non-metallic commodities.

Kenya is the third largest producer of soda ash in the world and the seventh producer of fluorspar. Metallic minerals currently produced in the country include titanium, gold and iron ore. Export statistics for Kenya indicate a constantly growing sector,” the report said.

In 2014, for instance, Kenya exported 281,503 metric tonnes of ilmenite, 52,465 mt of rutile and 23,000 mertric tonnes of Zircon.

After next year’s mapping, which has been pending since 2012 due to lack of funds, further exploration and uptake of mineral rights is expected to boost Kenya’s capacity to position itself as a mining hub.