Engineering & Mining Journal

AUG 2017

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REGIONAL NEWS - AFRICA 14 E&MJ • AUGUST 2017 www.e-mj.com Tanzania Slaps Huge Tax Bill on Acacia The government of Tanzania has sent Aca- cia Mining a bill of $190 billion in unpaid taxes and fines for years 2000 to 2017. This comes after the government alleged Acacia underdeclared export revenues. Bulyanhulu Gold Mine Ltd. and Pangea Minerals Ltd., the owners and operators of the Bulyanhulu and Buzwagi mines, respectively, received a series of Notices of Adjusted Assessment from the Tanzania Revenue Authority for historical corporate income tax, covering the periods 2000 to 2017 for Bulyanhulu Gold Mine and 2007 to 2017 for Pangea Minerals. The assess- ments follow on the findings of the First Presidential Committee, which were an- nounced on May 24 and the Second Presi- dential Committee announced on June 12. Acacia continues to refute the findings and said it has fully declared all reve- nues. The allegations made by the com- mittees are included in the matters that both companies have already referred to international arbitration. Bulyanhulu Gold Mine owes the gov- ernment a total of approximately US$154 billion, and Pangea Minerals approxi- mately US$36 billion. There is also a total of US$40 billion of alleged unpaid taxes and approximately US$150 billion of penalties and interest owed. Acacia said it is considering all of its options and rights and will provide a fur- ther update in due course. AngloGold Starts Process to Shut Down 2 Mines AngloGold Ashanti announced on June 28 that it was beginning a consultation process with employees in terms of sec- tion 189 and 189A of South Africa's Labour Relations Act that would lead to placing its Kopanang gold mine and the Savuka section of its TauTona gold mine on care and maintenance. In the first quarter of 2017, Kopanang produced gold at all-in sustaining costs of $1,737/ounce (oz), while Savuka produced gold at all-in sustaining costs of $2,399/oz. The gold price averaged $1,216/oz over that period. Both mines also sustained significant operating loss- es through 2016. The consultation with organized la- bor groups, facilitated by South Afri- ca's Council for Conciliation, Mediation and Arbitration, will be aimed at safe- ly returning AngloGold's South Africa business to profitability, whilst mitigat- ing job losses, the company statement said. Nevertheless, the shutdowns are expected to result in about 8,500 job losses. AngloGold currently employs about 28,000 people in South Africa, including contractors. AngloGold has two production centers in South Africa: its West Wits mining dis- trict operations southwest of Johannes- burg and its Vaal River operations near the Vaal River on the Free State-North West Province border. The TauTona mine is located in the West Wits district; Ko- panang is located in the Vaal River dis- trict. The company will evaluate the feasibility of integrating elements of the 60-year-old TauTona mine into the neigh- boring Mponeng mine. "The restructuring of the AngloGold's production and cost base is necessary to protect the overall viability of its South African business over the long- term and to safeguard employment at viable business units in the West Wits and Vaal River regions," the company said. "Some of our older mines in the South African region have reached the end of their economic lives, several decades after they started production. These mines face systemic challenges, including near-depletion of ore reserves, increasing depth and distance from cen- tral infrastructure, declining production profiles, and cost escalations that have continued to outpace both inflation and a subdued gold price." AngloGold Ashanti CEO Srinivasan Venkatakrishnan said, "This is a difficult decision, which follows a period of signif- icant and — ultimately — unsustainable losses, and also the evaluation of the op- tions available to return our South African business to profitability. It is critical that we act to protect the long-term sustain - ability of this business." A week following the AngloGold an- nouncement, South Africa's National Union of Mineworkers (NUM) AngloGold Ashanti Shaft Stewards Council issued a statement saying it would oppose the job cuts and would engage relevant gov- ernment departments and the compa- ny in an effort to avoid job losses. "The planned retrenchments will create more unemployment, increase poverty in the mining communities, and create ghost towns with no hope to human dignity," the council statement said. Kopanang (above) is one of two AngloGold Ashanti mines slated for closure.

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