Tazania Gov demands $190 billion in back taxes and fines

Acacia Mining (LON:ACA), Tanzania’s No.1 gold producer, announced Monday that it will reduce operational activity at its Bulyanhulu Gold Mine.

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Acacia Mining is Tanzania’s biggest gold producer and operates three major mines in the country — Bulyanhulu, Buzwagi and North Mara (pictured). (Image courtesy of Acacia Mining)

“The decision was driven by unsustainable cash outflows at the mine due to the concentrate ban and the operating environment,” officials said in a statement.

Acacia is in the midst of a bitter dispute with the Eastern African country’s government, whose mining authorities imposed a ban on exports of unprocessed ore to encourage the construction of a local smelter. The move, which took place in early March, prompted a collapse of the London-listed firm’s stock value.

The ban, the company states, has also left a build-up of ore and a negative cash flow of approximately $15-million per month.

 

The firm is also said to be struggling to meet taxes and other bills, following John Magufuli administration’s decision to serve it with a $190-billion bill in fines for alleged fraud and illegal operations.

“Acacia has therefore decided to commence a programme to reduce operational activity and expenditure at Bulyanhulu in order to preserve the viability of our business over the longer term. This programme will include the preservation of all assets and equipment to enable the mine to resume ordinary course operations should the export ban be lifted and the operating environment stabilised,” the miner’s release reads.

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The escalating conflict pushed world’s largest gold producer Barrick Gold (TSX, NYSE:ABX), which has a 64 per cent stake in Acacia, to intervene in July by mediating in the dispute. Both companies keep promoting a negotiated resolution and said that once such an outcome is reached, the group would quickly return to positive cash generation.

For now, annual production is expected to be 100,000 ounces lower than the bottom of the previous guidance range of 850,000-900,000 ounces.

 

*As reported here.

Ottawa Philanthropy Awards announce 2017 recipients

The AFP Ottawa Philanthropy Awards has announced its seven esteemed award recipients that will be honoured at the big gala event on November 14.

Presented by The Foundation (WCPD), which is serving as Title Sponsor for the second consecutive year, the AFP Ottawa Philanthropy Awards (known as “The Phils”) brings together some of the brightest stars in the nation’s capital, at the Shaw Centre, for one special night.

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With a unique blend of philanthropic works and corporate networking, The Phils is indeed a can’t miss occasion on the fall Ottawa social calendar.

Tickets are now available and be purchased here.

“We have a lot to be proud of in this city,” said Peter Nicholson, the President and Founder of The Foundation WCPD. “We support the Phils not only because these recipients deserve to be recognized, but because it is important that the brightest in the City of Ottawa come together each year to celebrate community and giving back.

I encourage everyone to come out and have a wonderful time.”

Congratulations to the following seven individuals, corporations and groups, who will be recognized at the 23rd annual AFP philanthropy Awards:

Cuckoo Kochar – Outstanding Individual Philanthropist

Tom Spence – Outstanding Volunteer Fundraiser

PBC Group – Outstanding Small Business Philanthropist

Hannah and Sophie Weider – Outstanding Individual Youth

Ottawa Catholic District School Board – Outstanding Philanthropic Group

Shopper’s Drug Mart – Outstanding Corporate Philanthropist

Jennifer Van Noort – Outstanding Fundraising Professional

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The award ceremony will also feature the unveiling of the first ever Ottawa Giving Guide, the city’s new, annual publication for highlighting non-profits throughout the city and celebrating what’s new and exciting in philanthropy.

The Foundation (WCPD) is a sponsor and founding partner of the guide, along with AFP Ottawa and the Ottawa Business Journal.

Register to attend this event today!.

Mining giants losing their grip on global market as local governments push back

DANIELLE BOCHOVE , Bloomberg News

Outnumbered and outflanked, Freeport-McMoRan Inc. chief executive officer Richard Adkerson made an about-face.

Only months before, Mr. Adkerson had dismissed the idea of selling a majority stake in the Phoenix-based company’s flagship Indonesian copper-and-gold mine to local investors. But, seated beside government officials in Jakarta last week, the veteran executive told reporters he planned to do just that.

“Freeport caves to govt demands” headlined The Jakarta Post while the Indonesian Energy and Mineral Resources Ministry tweeted its glee: “Freeport obedient, Indonesia is sovereign” and posted pictures of Mr. Adkerson, conspicuous in gold-and-black batik alongside triumphant local officials.

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Freeport-McMoRan has announced the sale of its majority stake in its flagship Grasberg mine in Indonesia. ANTARA FOTO/REUTERS

That image – a red-faced American CEO in a tropical shirt furiously back peddling – may come to haunt not just Mr. Adkerson but his cohort of multinational CEOs. Freeport’s loosening grip on its Indonesian crown jewel illustrates a larger challenge facing the global mining industry: In a surge of economic nationalism, local governments and unions are pushing back against Western dominance of the world’s natural resources.

“We’re seeing the rise of more nationalistic governments everywhere,” said Paul Mitchell, a partner at Ernst & Young’s mining and metals practice. “That desire to hold the assets of a nation and work on them themselves, I think, is only going to rise as we realize they’re becoming scarce, and are only going to become more scarce.”

In the past year, a merger between Harmony Gold Mining Co. and AngloGold Ashanti Ltd. stalled in South Africa because of regulations meant to increase black ownership of natural resources.

In Mongolia, calls for greater control of such valuable commodities have dominated the national election, while an attempt to force foreign miners to channel sales revenue through local banks threatened Rio Tinto Group’s operations and almost derailed an IMF bailout.

Last year, Freeport’s attempts to sell its share of a copper-and-cobalt mine in the Democratic Republic of Congo were stalled for eight months, ending only when the company made a $33-million (U.S.) exit payment to the government, a third of a settlement involving several companies.

In Zambia, Glencore PLC, a Switzerland-based miner and commodities trader, threatened to fire 4,700 workers after the government raised power prices – and then turned off the switch – before agreeing to pay, the president’s office said. First Quantum Minerals Ltd. had earlier agreed to higher tariffs, according to the government.

In Tanzania, gold miner Acacia Mining PLC, majority owned by the world’s largest gold producer, Canada’s Barrick Gold Corp., is facing a tax bill on its gold mines equal to four times the country’s GDP and a demand from the President that it “seek forgiveness in front of God and the angels.”

“Governments start seeing companies making more money and, around the world, start seeing other ways of getting more out of it,” Mr. Adkerson told analysts during Freeport’s second-quarter earnings call in July. Those government disputes, as well as more strikes and aging mining equipment, will disrupt metal supplies and “super charge” prices, he said.

To be sure, some developing nations are becoming more welcoming of foreign mining companies. In Latin America, for example, Argentina and Ecuador have adopted more investor-friendly rules in a bid to exploit their vast mineral potential.

Still, a decade-long boom in copper prices, which peaked in 2011, has made many governments increasingly eager for a piece of the mining action. Prices retreated, reaching their low in early 2016 and have since partly rebounded.

“People perceived companies to be making very large windfall profits, notwithstanding the fact that many companies’ costs also increased amid higher commodity prices,” said Gus MacFarlane, vice-president of mining and metals at Verisk Maplecroft, a research firm that focuses on reducing corporate risk.

Freeport’s Indonesian operations have always been lucrative and tough to manage. Rain forests surround its flagship property in Papua, the largest and most remote province in Indonesia.

Viewed from above, Grasberg’s gaping maw dwarfs nearby Puncak Jaya, the highest mountain in Indonesia. Freeport’s largest mine, it represented roughly a fifth of the company’s $14.8-billion revenue last year and produced more than a billion pounds of copper and a million ounces of gold.

Since its early dealings with Indonesian president Suharto, the company has been the target of local separatist and indigenous groups, as well as international environmental and human-rights organizations. Freeport has relied on the military to protect operations from riots and violent protests. In 2011, the authorities fired on striking workers, killing one.

Today, workers at Grasberg are entering Month 5 of what they consider a strike. Freeport describes it differently, saying that 4,000 workers have “voluntarily resigned” after being asked to refrain from high rates of “absenteeism.”

Given this environment, Fraser Institute, a Canadian think tank, ranked Indonesia 99th out of 104 mining jurisdictions in terms of investor perception of the favourability of government policies.

Mr. Adkerson, who is 70 and has worked for the company’s various incarnations for more than two decades, must now negotiate the terms of Grasberg’s divestment with the Indonesian government. The two sides still need to agree on the price that local investors will pay Freeport to reduce its stake from 81 per cent to 49 per cent.

For now at least, Freeport intends to keep operating the mine. But, someday, improved technology may let national governments run mines essentially on their own, cutting out the Freeports of the world almost entirely, according to Ernst & Young’s Mr. Mitchell.

“I wonder if what we’re starting to see is governments realizing that, and starting to agitate in preparation,” he said. “Is the increase in nationalism just nationalism or is it governments thinking: we don’t actually need the mining companies anymore?”

 

*Story as seen in The Globe & Mail