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This report provides estimates of Acacia Mining’s economic contribution in Tanzania. This is the fifth annual EY analysis of the company’s economic contribution.1 The direct impacts are for Acacia’s operations in 2016; the estimates of related economic activity in Tanzania use multipliers developed in EY’s previous studies. Acacia owns and operates three gold mines in Tanzania: Bulyanhulu, Buzwagi, and North Mara. The economic impact analysis described in this report finds that Acacia’s Tanzanian entities support economic activity across a wide range of industries in Tanzania, including thousands of jobs with suppliers and other businesses and millions of dollars of government revenue.
Table ES-1 summarizes the key findings of the analysis. Acacia’s total direct, indirect, and induced economic contribution in Tanzania in 2016 included more than 36,000 jobs, approximately US$339 million of labour income, and nearly US$724 million of value added (GDP). In total, including direct, indirect, and induced taxes paid by Acacia, its employees, suppliers, and other affected businesses, Acacia’s total tax contribution in 2016 was an estimated US$214 million. The overall full employment multiplier (including indirect and induced economic activity) is 17, which can be interpreted as, for each direct Acacia employee, 16 additional wage jobs and self-proprietors are supported in the broader Tanzanian economy. The wage employment multiplier is 12, which can be interpreted as, for each direct Acacia employee, 11 additional wage jobs are supported in the broader Tanzanian economy. These multipliers are consistent with the high output per worker experienced in the mining industry.
In general, the economic and fiscal contributions estimated in this analysis can be expected to change in proportion to changes in Acacia’s direct employment, labour income, and value added in future years. The estimates would also be affected by changes in the nature of capital investment expenditures or the industry distribution of Acacia’s supplier purchases.
Table ES-1. Estimated economic and fiscal contributions of Acacia in Tanzania, 2016
Total number of employees; Millions of 2016 US dollars
Direct Indirect & induced Total
Wage employment 2,988 33,300 36,288
Labour income $ 101 $238 $339
Value added (GDP) $ 203 $521 $724
Tanzania taxes, net of anticipated VAT refunds $167 $47 $214
Addendum:
Full employment (wage employment & self-proprietors) 2,988 48,800 51,788
Note: Indirect and induced employment impacts are rounded to the nearest hundred.
Source: EY analysis based on Acacia data and publicly available economic data for Tanzania. Data provided by Acacia management were not independently audited by EY.
Specific findings of the analysis include the following:
Acacia generates economic impact for each ounce of gold mined. For every thousand troy ounces of gold produced, Acacia adds more than $872,000 in value to the Tanzanian economy, 44 jobs in the Tanzanian economy, and $243,000 in direct, indirect and induced tax revenue.
Acacia is a high-wage employer. In 2016, Acacia employed nearly 3,000 workers in Tanzania and paid wages and benefits totaling more than $101 million. On average, employees received nearly $34,000 in wages and benefits.
Acacia provides jobs to Tanzanian nationals. Of Acacia’s nearly 3,000 full and part-time wage employees in Tanzania, approximately 2,800 (95%) were Tanzanian nationals.2 The proportion of Acacia employees who are Tanzanian nationals is consistent with other mining companies in Tanzania.3 Tanzanian nationals employed by Acacia received an average annual wage of approximately US$20,000, a rise from these employees’ average annual wage of US$17,000 in 2015. The average annual wage for Tanzanian nationals employed by Acacia in 2016 was more than 10 times higher than the average earnings of US$1,878 for Tanzanian workers throughout the economy in 2016.
Acacia has a strong Tanzanian supply chain. In 2016, Acacia’s Tanzanian entities purchased US$413 million of goods and services from other Tanzanian businesses for use by its Tanzania operations. These purchases of Tanzanian goods and services accounted for 66% of total supplier purchases made by Acacia’s Tanzanian entities. Of this amount, approximately US$112 million was purchased from businesses local to Acacia’s mines.
Acacia’s supply-chain spending supported nearly 20,500 indirect wage-earning jobs. Acacia’s supplier spending supported jobs across all sectors of the Tanzanian economy, with the most jobs concentrated in the transportation, communication and other services sectors.
Consumption spending by Acacia and supplier employees supported nearly 12,800 induced jobs. These jobs, related to consumption spending by Acacia and supplier employees on food, clothing, housing, and other goods and services, supported jobs that were concentrated in the agriculture and other services sectors.
Acacia’s total contribution to Tanzanian GDP in 2016 was approximately US$724 million. This level of total GDP contribution is equivalent to approximately 1.6% of total Tanzanian GDP in 2016.
Acacia and Acacia employees together incurred approximately US$167 million in taxes and royalties in Tanzania in 2016. Acacia incurred nearly US$128 million in taxes and royalties, approximately 80% of which was related to corporate income taxes and royalties, while the remaining 20% was related to unrecovered VAT, customs & excise taxes, payroll taxes, and other levies. Of this, US$14 million of corporate income tax will be paid on assessment in 2017. Acacia’s employees paid an estimated US$39.3 million in taxes. The majority (70%) of the estimated employee tax impact results from individual income taxes and social security contributions paid by employees. Employees also paid significant amounts of VAT, excise, and other taxes on consumption spending.
Acacia’s total government revenue contribution per employee is more than 100 times higher than the national average. Per employee, Acacia contributes US$38,100 of direct taxes and royalties, compared to approximately US$332 per worker economy-wide.
Acacia’s economic activity resulted in indirect and induced tax impacts of US$47 million, for a total tax contribution of US$214 million.
Acacia invests in its local communities. In 2016, Acacia’s spending related to social investments in Tanzania totaled nearly US$11 million. Of this, over $6 million was spent on a variety of initiatives in education, health, infrastructure, water and sanitation, primarily in the communities surrounding Acacia’s mines.
Table ES-1 summarizes the key findings of the analysis. Acacia’s total direct, indirect, and induced economic contribution in Tanzania in 2016 included more than 36,000 jobs, approximately US$339 million of labour income, and nearly US$724 million of value added (GDP). In total, including direct, indirect, and induced taxes paid by Acacia, its employees, suppliers, and other affected businesses, Acacia’s total tax contribution in 2016 was an estimated US$214 million. The overall full employment multiplier (including indirect and induced economic activity) is 17, which can be interpreted as, for each direct Acacia employee, 16 additional wage jobs and self-proprietors are supported in the broader Tanzanian economy. The wage employment multiplier is 12, which can be interpreted as, for each direct Acacia employee, 11 additional wage jobs are supported in the broader Tanzanian economy. These multipliers are consistent with the high output per worker experienced in the mining industry.
In general, the economic and fiscal contributions estimated in this analysis can be expected to change in proportion to changes in Acacia’s direct employment, labour income, and value added in future years. The estimates would also be affected by changes in the nature of capital investment expenditures or the industry distribution of Acacia’s supplier purchases.
Table ES-1. Estimated economic and fiscal contributions of Acacia in Tanzania, 2016
Total number of employees; Millions of 2016 US dollars
Direct Indirect & induced Total
Wage employment 2,988 33,300 36,288
Labour income $ 101 $238 $339
Value added (GDP) $ 203 $521 $724
Tanzania taxes, net of anticipated VAT refunds $167 $47 $214
Addendum:
Full employment (wage employment & self-proprietors) 2,988 48,800 51,788
Note: Indirect and induced employment impacts are rounded to the nearest hundred.
Source: EY analysis based on Acacia data and publicly available economic data for Tanzania. Data provided by Acacia management were not independently audited by EY.
Specific findings of the analysis include the following:
Acacia generates economic impact for each ounce of gold mined. For every thousand troy ounces of gold produced, Acacia adds more than $872,000 in value to the Tanzanian economy, 44 jobs in the Tanzanian economy, and $243,000 in direct, indirect and induced tax revenue.
Acacia is a high-wage employer. In 2016, Acacia employed nearly 3,000 workers in Tanzania and paid wages and benefits totaling more than $101 million. On average, employees received nearly $34,000 in wages and benefits.
Acacia provides jobs to Tanzanian nationals. Of Acacia’s nearly 3,000 full and part-time wage employees in Tanzania, approximately 2,800 (95%) were Tanzanian nationals.2 The proportion of Acacia employees who are Tanzanian nationals is consistent with other mining companies in Tanzania.3 Tanzanian nationals employed by Acacia received an average annual wage of approximately US$20,000, a rise from these employees’ average annual wage of US$17,000 in 2015. The average annual wage for Tanzanian nationals employed by Acacia in 2016 was more than 10 times higher than the average earnings of US$1,878 for Tanzanian workers throughout the economy in 2016.
Acacia has a strong Tanzanian supply chain. In 2016, Acacia’s Tanzanian entities purchased US$413 million of goods and services from other Tanzanian businesses for use by its Tanzania operations. These purchases of Tanzanian goods and services accounted for 66% of total supplier purchases made by Acacia’s Tanzanian entities. Of this amount, approximately US$112 million was purchased from businesses local to Acacia’s mines.
Acacia’s supply-chain spending supported nearly 20,500 indirect wage-earning jobs. Acacia’s supplier spending supported jobs across all sectors of the Tanzanian economy, with the most jobs concentrated in the transportation, communication and other services sectors.
Consumption spending by Acacia and supplier employees supported nearly 12,800 induced jobs. These jobs, related to consumption spending by Acacia and supplier employees on food, clothing, housing, and other goods and services, supported jobs that were concentrated in the agriculture and other services sectors.
Acacia’s total contribution to Tanzanian GDP in 2016 was approximately US$724 million. This level of total GDP contribution is equivalent to approximately 1.6% of total Tanzanian GDP in 2016.
Acacia and Acacia employees together incurred approximately US$167 million in taxes and royalties in Tanzania in 2016. Acacia incurred nearly US$128 million in taxes and royalties, approximately 80% of which was related to corporate income taxes and royalties, while the remaining 20% was related to unrecovered VAT, customs & excise taxes, payroll taxes, and other levies. Of this, US$14 million of corporate income tax will be paid on assessment in 2017. Acacia’s employees paid an estimated US$39.3 million in taxes. The majority (70%) of the estimated employee tax impact results from individual income taxes and social security contributions paid by employees. Employees also paid significant amounts of VAT, excise, and other taxes on consumption spending.
Acacia’s total government revenue contribution per employee is more than 100 times higher than the national average. Per employee, Acacia contributes US$38,100 of direct taxes and royalties, compared to approximately US$332 per worker economy-wide.
Acacia’s economic activity resulted in indirect and induced tax impacts of US$47 million, for a total tax contribution of US$214 million.
Acacia invests in its local communities. In 2016, Acacia’s spending related to social investments in Tanzania totaled nearly US$11 million. Of this, over $6 million was spent on a variety of initiatives in education, health, infrastructure, water and sanitation, primarily in the communities surrounding Acacia’s mines.
