Technical explanation on Concentrate Ban from ACACIA Chief Operating Officer

king Davidson

JF-Expert Member
Feb 9, 2017
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How and why do we produce gold and copper concentrates?

On Friday 3rd March, the Ministry of Energy and Minerals issued a press release stopping the export of mineral sands on the basis that companies should be investing in building smelters in Tanzania for further processing, rather than shipping this product to other countries.

The directive has been in place for two weeks now and affects Acacia at both Bulyanhulu and Buzwagi, which produce a concentrate containing gold, copper and silver. North Mara is not affected.

Our CEO, Brad Gordon was in Tanzania last week to attend urgent meetings with government officials and to try and explain the impact that this ban will have on our business even while we have further dialogue on a suitable way forward to explore smelter options for Tanzania. At this stage, the ban remains in place though we remain hopeful that there will be some positive news in the near future so that normal operations can be restored.

The export of mineral sands, or in our case, the sale of gold and copper concentrate, is an emotive subject in every country with sovereign mineral wealth. There is a view that Tanzania is losing considerable added value by not smelting and refining concentrates in country, while there is another view that companies are also stealing from Tanzania by not declaring all the metals contained in the concentrate.

These are serious issues, with serious consequences for our integrity and the sustainability and profitability of our business and the Tanzanian mining industry. For Acacia to be successful in Tanzania, we must be able to address and correct these misconceptions. Just so everyone is clear, at our mines, we generate our revenue by:

1. Producing and selling gold bars (doré) which are then refined into a more pure gold product – this accounts for 55% of revenues at Bulyanhulu, 45% of revenues at Buzwagi and 100% of revenues at North Mara


2. Producing and selling a concentrate which is smelted and refined to separate out the gold, copper and silver – this accounts for 45% of revenues at Bulyanhulu, 55% of revenues at Buzwagi and 0% of revenues at North Mara


Gold sales account for 95% of total revenues, with 70% coming from doré sales and 25% coming from gold contained within the concentrate. The remaining 5% of revenues is from copper in the concentrate and a very small amount of silver. On this basis, the company is currently losing 30% of its total revenue stream, and around 50% of the combined revenues of Bulyanhulu and Buzwagi. With the concentrate ban in place, this equates to lost revenue of more than $1 million per day (with additional revenue lost for all of the concentrate sitting in Dar es Salaam waiting for shipment for which royalties have been paid).


Addressing the issue of trust


There is a perception that we do not declare everything that is in our concentrate. This is simply not true.

The Tanzania Minerals Audit Agency (TMAA) is present at each of our mines and even has padlocks and seals on various pieces of equipment inside the gold room so that we cannot operate them without the TMAA being physically present to verify everything that we do. Every gold bar and every shipping container of concentrate is sampled so that we know the content of gold, copper and silver. Four samples are taken: one for Acacia, one for the TMAA, one for the overseas smelter and one umpire sample which is kept separate and used if there is a dispute or difference between the other samples.

Further to having the TMAA on site, when it comes time to transporting the gold bars or the concentrate, the Tanzania Revenue Authority (TRA) is also present to observe the process. Before the containers of concentrate can be loaded onto trucks, we must know the value of the gold, copper and silver in the concentrate from the samples taken, and pay the royalty to the government. When the royalty is received in the government bank accounts, the containers are sealed by the TMAA and TRA and then trucking can commence.

What is a concentrate and why do we produce it?

How we process our ore to liberate the contained precious minerals is determined by how and why these minerals were originally formed or deposited in the rocks hundreds of millions or billions of years ago. The scientific fields of geology, mining engineering and metallurgy (mineral processing) are fascinating and require an in depth understanding of the best way to find, mine and process (extract) the payable minerals.

In general terms, when gold is the only payable mineral present (i.e. >98-99% of the value), we can process the ore on the mine site and create gold bars. At both North Mara and Geita, gold is extracted using gravity techniques for the coarse, free gold and then cyanide to leach the finer disseminated gold. Gold bars are smelted at both mines.

Bulyanhulu and Buzwagi have slightly different processes, due to the rock types at the mines which host the gold (95% of the value) and other payable metals such as copper and silver (the remaining 5% of the value). Both mines are still able to extract around half of their gold using gravity and cyanide leach techniques. However we need to use more elaborate techniques to break down the sulphide rock so that the rest of the gold, copper and silver can be liberated.

Fortunately, we can concentrate the sulphides using a process called ‘flotation’ where chemicals are added to the finely ground rock, causing the ore to float and thus separate from the waste rock. The flotation processes are very effective and allow for the gold, copper and silver to be concentrated into a product with much higher values and a much smaller mass than was originally mined:

 Bulyanhulu Mine can process 1.0 million tonnes of underground ore per year and, through the flotation process, remove most of the waste rock and concentrate the minerals into approximately 25,850 tonnes of concentrate containing gold and copper. That is nearly a 40 times reduction in mass which then makes the resultant concentrate valuable enough to sell


 Buzwagi Mine can process 4.4 million tonnes of open pit ore per year which is much lower grade and, through flotation, remove most of the waste rock and concentrate the minerals into approximately 25,750 tonnes of concentrate containing gold and copper. That is nearly a 200 times reduction in mass which then makes the resultant concentrate valuable enough to sell
We can never recover 100% of the gold, silver and copper from our ore. At Bulyanhulu, our gravity, cyanide leach and flotation processes are maximised to achieve the best gold recovery whilst recovering sufficient copper to make the concentrate worthwhile for the smelters (whose primary product in copper) to even want to purchase from us.


I trust that people understand from this brief description, that it is the type of orebody that dictates the processing options that we use. In some respects, North Mara and Geita are actually lucky because they are able to do all of their processing on site and only produce gold bars. For the Bulyanhulu and Buzwagi concentrates, gold is still the most important product as the copper and silver is only 10-15% of the value of the concentrate.


Downstream Processing

It appears that one of the main concerns causing the ban on our selling concentrates for export is that we should be doing all of the downstream processing in Tanzania because otherwise the country doesn’t potentially get full benefit for its minerals. It is important to note that our gold/copper/silver concentrates are already a highly processed and beneficiated product.

Whilst the smelters do charge to process our concentrate, on average for the contract terms that we have agreed with the overseas smelters, we receive 97% of the total value of gold, silver and copper. That is because with any smelting or other chemical process, getting 100% recovery is impossible and these terms pass the risk to the overseas smelters to ensure that they can actually achieve above these recovery rates (or they will lose money). In Tanzania (if a smelter were built), the smelter operator would need to offer competitive terms, not just on price but also on recovery of the various metals, therefore their margins would depend on their own processing costs and efficiency.

There are generally two different types of downstream treatment options to extract the gold, copper and silver from the concentrate: smelting and oxidation. There are three types of oxidation process: roasting, pressure oxidation and biooxidation. The type of process used will depend on a number of variables including the types of ore, size of facility and access to cheap power.

1) Smelting: involves heating the concentrate to 1,200°C to melt the valuable metals (gold, copper and silver)

2) Roasting: essentially ‘cooking’ the concentrate at 750°C and isolating the gold, copper and silver by converting the sulphur in the sulphide minerals into sulphur dioxide gas (which then produces large volumes of sulphuric acid)

3) Pressure oxidation: an autoclave (massive oven) operating at temperatures of 190 - 225°C and high pressures of 1.9 - 3.2 MPa (many components constructed from titanium due to the aggressive conditions)

4) Bio-oxidation: use bacteria in a liquid wash at 42°C, which literally ‘eat’ the sulphide away from the contained gold, copper and silver

There is a lot more detail which can be provided to explain these various processing techniques, though in each case the copper is first separated from the gold and silver and these are treated separately to get the final metal product.

If our mines were able to build dedicated downstream processing facilities, they would be tiny compared to the large commercial smelters. Furthermore, power costs in Tanzania are high compared to other countries with developed smelting industry. When the mines were being built (Bulyanhulu in 1999-2000 and Buzwagi in 2007-2008), studies showed that it was far more cost effective to sell the concentrates to large commercial toll smelters with access to cheap power rather than build our own. We currently sell our concentrate to smelters in Germany, China and Japan.

Based on the current mine plan, Buzwagi will only produce concentrate for another 18 months, after which time, when it is processing the low grade oxide stockpiles, it will not recover any copper and all gold will recovered by gravity and cyanide leach. This will leave Bulyanhulu as the only large scale mine in Tanzania which produces a concentrate.

What do you think?

As employees of Acacia, or contractors working at the Acacia mines, or family and friends, you will no doubt wonder why there is no smelting facility for our gold, copper and silver concentrates in Tanzania.

Ultimately, if it made economic sense to do so – for the country and for the company – then such facilities would have been built. In the south of the DRC and in northern Zambia (all part of the same copper belt, where copper is the primary product), there are sufficient mines producing copper concentrate to warrant constructing large smelters and refineries in country to serve a number of mines which can share the cost. In South America, some of the copper mines – such as Chuquicamata in Chile – are so large that they do their own downstream processing (with a capacity of 855,000 tonnes per year, compared to the Bulyanhulu requirement of just 25-30,000 tonnes per year).

The TMAA conducted an independent study into the construction of a smelter for copper and gold in Tanzania which was updated in early 2011 and which concluded that it was not viable to do so. Acacia has offered to fund the Government conducting an update of this study (though we would not be involved in the study itself), to see whether the situation has changed.

It is important that we all understand more about this concentrate ban so that when it is discussed in different circles, more informed comments and discussions can be had. This issue really is affecting all of us. Please do provide feedback so that we can help to make this matter easier to understand, build trust and explain. With the current approach, we believe we are doing the best for Tanzania and Acacia, by downstream processing our gold and copper ore into a gold copper concentrate on site in Tanzania and then selling this product for smelting and refining in other countries.

Asante Sana

Mark Morcombe
Chief Operating Officer
 

kamwamu

JF-Expert Member
May 18, 2014
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alarming! currently ur losing dollors 1m in revenues per day on the 30% concetrate business stopped. how much do u earn from the 70% pure gold share? and it is said none of have paid tax since then? dear my country!
 

Kiberiti Kidogo

JF-Expert Member
Jan 14, 2017
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i do agree that acacia as company has nothing to be blamed on this issue, As business always struggle to make their investment profitable as they can.
As long they have formal agreement with Tanzania gavernment on all this. Why should we blame Them? Due to their good negotiations skills, they managed to attain the contract successful.

My concern should Tanzania government honor the gentlemen agreement as suppose to be, if they think there was some Incompetence, error, corruption or any kind of manipulations in attaining or negotiating the contract, there is proper procedures to rectify the problem.

This dictatorial ban might put government into deep hole that will be difficult to escape easily.

Serikali must admit mistake and correct it in wise and correct manner. Or else uchumi utayumba
Serikali yetu sio ya kioga kama unavofikiri. Njia sahihi ndo hiyo.
 

Kiberiti Kidogo

JF-Expert Member
Jan 14, 2017
576
1,000
You forgot to add that, the companies can operate for 10 up to 20 years without paying taxes. Some companies including Acacia have been declaring losses for 17 straight years while paying dividends abroad to their shareholders.

Hii nchi tulikuwa tunachezewa kweli kweli, sasa imetosha!!
Jamaa unahasira kama Mimi ujue.
 

JMWAKA

JF-Expert Member
Jun 18, 2012
655
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Hawa wezi kwanza walipe walichoiba kwa miaka 19 alafu pili kwanini hawauzi his a zao DSE ila London kwahyo wanatufanya sisi wajinga wachimbe huku kwetu alafu wamiliki wao na huyo jamaa aliyeandika essay kama ni mtz hana utu na uzalendo zaidi ya tamaa ya tumboni kwake

More than 100 trilions of shillings for all those years those white pigs are stealing from us Magufuli eat them alive they are murderous
 

chamazi

Member
May 30, 2013
24
45
Biashara siku zote ni shughuli ya wizi "uliohalalishwa kwa ujanja" na ujinga wa upande wa pili wa mkataba husika. Mjinga huyo akielimika na kugundua udhaifu uliomuumiza hana budi kulazimisha mabadiliko katika biashara husika ili wafaidi pande zote bila dhuruma kati yao. Wazungu tangu enzi ni wezi kwa wanyonge ndio maana uhuru wa ukombozi ni lazima na muhimu. Ni vita ngumu ni lazima kushinda. Madini ni yetu hayaozi hatulazimiki kuwauzia kiunyonyaji.
 

Johnson Fundi

JF-Expert Member
Jan 11, 2011
760
1,000
you are too negative to these companies as if they had totally done zero to this country's economy,in my view its not true. it seems you are just reading in books and papers you have not lived in Geita, kakola, Ilogi,Bugarama etc. thinking of those thousands of people who are getting direct benefits out of those investments, expelling them as you are suggesting, to me its a sharp knife cutting mercilessly my fresh. am not an employee and i never was but i used to live in those places. am not saying they are honest hundred percent, there can be some dubious things they are doing but i think we need to approach this issue with a WIN WIN GOAL ACHIEVEMENT rather than the way you are suggesting
 

Charles Mandela

Verified Member
Dec 9, 2011
545
2,000
you are too negative to these companies as if they had totally done zero to this country's economy
What had they done to our country's economy?
in my view its not true.
So what's your suggestion?
it seems you are just reading in books and papers you have not lived in Geita, kakola, Ilogi,Bugarama etc.
I was born and raised in mining areas, Shinyanga. Also I'm not a layman, I have a wide ranging of metallurgy and mineral processing plant dealt with rocks, minerals and gemstones. While I specialize in extractive metallurgy, I'm familiar with both the mechanical and physical metallurgy as well.
thinking of those thousands of people who are getting direct benefits out of those investments, expelling them as you are suggesting to me is a sharp knife cutting mercilessly my fresh.
If I steal your farm then give you oranges from your orchard, it's not charity.

If they loot our minerals but pay for our cast through employment, is it really a benevolent act?

Faced with the truth and you'll still can't admit the very malicious and old school investment style of these multinational companies.
am not an employee and i never was but i used to live in those places.
These companies are getting wealthy and causing irreparable to the specific places and its citizens lives, a good example is Tarime district.
am not saying they are honest hundred percent, there can be some dubious things they are doing but i think we need to approach this issue with a WIN WIN GOAL ACHIEVEMENT rather than the way you are suggesting
Our government is trying to do so, but a win - win deal for both parties has no bearing on the obvious fact that mining company like Acacia was a natural consequence of the social relation and murderous drive to our economic expansion.
 

offg76

JF-Expert Member
Dec 3, 2016
368
500
Walete hizo data kwenye meza ya mazungumzo, mbona wanakimbilia media? Serikali inazo data zao zote, containers bado zipo pale, list za ulipaji wao wa kodi zipo! Data za containers zilizosafirishwa zipo, data zao mauzo ya dhahabu kidunia za nyuma namna walivyokuwa wanawapa gawio wanahisa wao na sifa kemkem za kupata faida zipo, declaration za wao kupata hasara wakiiambia serikali zipo, sasa si waje, mbona propaganda nyingi? Magu alikubali mazungumzo sasa tatizo nini? Wanataka kuiaminisha dunia nini? Sasa si waje na data.

Sent using Jamii Forums mobile app
 

Charles Mandela

Verified Member
Dec 9, 2011
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Acacia facts behind the TANZANIAN Export ban
Acacia is a law abiding company that has always declared all materials it has produced and paid all royalties and taxes that are due.

Under our agreements with the Tanzanian Government, our mines are permitted to sell their fully declared gold/copper concentrate products to overseas customers and to export the concentrates in containers, and they are in full compliance with the agreements and our export permits. Since March 3rd 2017 an export ban has been imposed on gold/copper concentrate exports which impacts around 50% of our combined production at Bulyanhulu and Buzwagi.

Acacia has also called for an independent review of the recent First and Second Presidential Committee reports that generated, in our view, inaccurate and unexplainable findings and allegations. Acacia strongly refutes these unfounded accusations. We have always conducted our business to the highest standards and operated in full compliance with Tanzanian law. In addition, our published accounts are annually audited to an international standard in accordance with IFRS.

Acacia has been operating in Tanzania for nearly 20 years with three gold producing mines, Bulyanhulu, Buzwagi and North Mara, all located in the north-west region of the country.

During that time, Acacia has contributed significantly to the national and local economy, establishing itself as the largest investor and employer in Tanzania.

The continuation of the export ban will not only hurt Acacia’s ability to conduct future business in the country, but will directly and negatively affect the lives of thousands of Tanzanians. The security of the 36,200 indirect and induced jobs that rely on Acacia’s mining operations, as well as the company’s ability to invest in education, infrastructure and health projects will all be under threat.

As a company, we are and always have been committed to acting responsibly towards the people of Tanzania, their environment and their communities. This sits at the heart of our culture as a foreign company investing in Tanzania. Foreign investment and the private sector plays an important role in the economic advancement of Tanzania and we ask that the people of Tanzania’s economic future is not put at risk.

On 16 June Acacia announced that Barrick and the Government of Tanzania agreed to enter into discussions in order to reach a mutually acceptable solution to the issues relating to the ban on the export of gold/copper concentrates as well as the future framework for Acacia’s operations in Tanzania.

On 29 June 2017 the Government of Tanzania announced the publication of draft legislation which recommended changes to the legal framework governing the natural resources sector in Tanzania. In addition to this Parliament has approved the new Finance Act, which will impose a 1% clearing fee on the value of all minerals exported from the country from the 1st July 2017.

New legislation was urgently passed by the Parliament in Tanzania on 3 July 2017 completely altering the legal and regulatory regime that had attracted FDI in the entire resources sector to date. The legislation is expected to become law in early July.

On 4 July 2017 Acacia announced that Notices of Arbitration were served in Tanzania on behalf of Bulyanhulu Gold Mine Limited (“BGML”), the owner of the Bulyanhulu mine, and Pangea Minerals Limited (“PML”), the owner of the Buzwagi mine.
 

Charles Mandela

Verified Member
Dec 9, 2011
545
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Disputed Tax Assessments claimed by Acacia

On 24 July, Bulyanhulu Gold Mine Limited (“BGML”) and Pangea Minerals Limited (“PML”), the owners and operators of the Bulyanhulu and Buzwagi mines, respectively, received a series of Notices of Adjusted Assessment (the “Assessments”) from the Tanzania Revenue Authority (“TRA”) for historical corporate income tax, covering the periods 2000 to 2017 for BMGL and 2007 to 2017 for PML. The Assessments were issued in respect of alleged under-declared export revenues, and appear to follow on from the findings of the First Presidential Committee announced on 24 May 2017 and the Second Presidential Committee announced on 12 June 2017. As we have stated previously, Acacia refutes each set of findings and re-iterates that it has fully declared all revenues. We have yet to receive copies of the reports issued by the First and Second Presidential Committees. The allegations made by the First and Second Committee are included in the matters that both BGML and PML have already referred to international arbitration

The Assessments assert that BGML owes the Government a total of approximately US$154 billion, and PML approximately US$36 billion. The Assessments claim a total of approximately US$40 billion of alleged unpaid taxes and approximately US$150 billion of penalties and interest owed. Acacia disputes these assessments. The Company is considering all of its options and rights and will provide a further update in due course.

To put the amount that Acacia purportedly owes (US$190 billion) into context:

It is the equivalent to 424 trillion Tanzanian shillings.

It is more than ten times the amount that all the Top 5 global gold miners combined have paid in taxes since 2000.

It is 5 times bigger than the total annual sales of the biggest 10 gold companies in the world combined.

It is over 30 times the total revenue that has been generated by Bulyanhulu and Buzwagi since their inception.

It is over 200 times Acacia’s market value (as at 25 July 2017).

It is over 1,000 times greater than the total amount of cash that Acacia has in the bank (as at 30 June 2017).

It is 4 times the entire GDP of Tanzania 2016.

It is greater than the annual GDP of 140 of the 191 countries in the world, according to the International Monetary Fund’s statistics from 2016.
 

Massanda OMtima Massanda

JF-Expert Member
Jun 27, 2017
1,059
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Canada Just Can't Quit Its Most Abusive Mining Company

Nearly two years in, the Trudeau regime has yet to follow through on any of their promises to rein in Canada's controversial international mining sector.

Yves Engler: Writer and Political Activist

Will the Canadian government continue to support Barrick Gold's exploitation of mineral resources in Tanzania no matter what abuses the company commits?

Would the Trudeau government stop backing the Toronto-based firm if it bilked the impoverished nation out of $10 billion?

Or, what if one thousand people were raped and seriously injured by Barrick security?

Would Ottawa withdraw its support if one hundred Tanzanians were killed at its mines?

View attachment 558812
Protesters hold signs near police as Barrick Gold holds their annual shareholders meeting in Toronto, Ont., on April 25, 2017.

Barrick's African subsidiary, Acacia Mining, is embroiled in a major political conflict in the east African nation. With growing evidence of its failure to pay royalties and tax, Acacia has been condemned by the president, had its exports restricted and slapped with a massive tax bill.

In May, a government panel concluded that Acacia significantly underreported the percentage of gold and copper in mineral sand concentrates it exported. The next month a government commission concluded that foreign mining firms' failure to declare revenues had cost Tanzania $100 billion. According to the research, from 1998 to March 2017, the Tanzanian government lost between 68.6 trillion and 108.5 trillion shillings in revenue from mineral concentrates.

The controversy over Barrick's exports led President John Magufuli to fire the minister of mining and the board of the Minerals Audit Agency. Tanzania's parliament has also voted to review mining contracts and to block companies from pursuing the country in international trade tribunals.

While the political battle over royalty payments grows, human rights violations continue unabated at Barrick's North Mara mine. A recent MiningWatch fact-finding mission discovered that:


At least 22 people have been killed and 69 injured near or at the North Mara mine since 2014. Most of the victims were impoverished villagers who scratch rocks for tiny bits of gold and who often mined these territories prior to Barrick's arrival. An early 2016 government report found security and police paid by Barrick had killed 65 people and injured 270 at North Mara since 2006. Tanzanian human rights groups estimate as many 300 mine-related deaths, and the Financial Times reports that not a single police officer or security guard working for the company has been killed on duty.

Amidst the violence at North Mara and an escalating battle over unpaid tax, Canada's High Commissioner set up a meeting between Barrick Executive Chairman John Thornton and President Magufuli. After accompanying Barrick's head to the encounter in Dar es Salaam, Ian Myles told the press, "Canada is very proud that it expects all its companies to respect the highest standards, fairness and respect for laws and corporate social responsibility. We know that Barrick is very much committed to those values."

View attachment 558813
Barrick Gold Executive Chairman John Thornton attends the company's annual shareholders meeting in Toronto, Ont. on April 25, 2017.

Appointed by Trudeau last year, Myles — whose "passion for international development began" when he was 17, according to a University of Toronto profile — took a page out of Stephen Harper's playbook. During a 2007 trip to Chile, the former prime minister responded to protests against various ecological and human rights abuses at the firm's Pascua Lama project by saying: "Barrick follows Canadian standards of corporate social responsibility."

A Tanzania Business Ethics columnist was not happy with the High Commissioner's intervention. In response, Samantha Cole wrote:


Disregarding its election promise, the Trudeau government is openly throwing this country's diplomatic weight behind Canada's most controversial mining company in the country where it has committed its worst abuses. When asked about Canada's massive international mining industry during the election, the party responded: "The Liberal Party of Canada shares Canadians' concerns about the actions of some Canadian mining companies operating overseas and has long been fighting for transparency, accountability and sustainability in the mining sector."

The Liberals' statement included explicit support for An Act Respecting Corporate Accountability for Mining, Oil and Gas Corporations in Developing Countries, which would have withheld some diplomatic and financial support from companies found responsible for significant abuses abroad. Similarly, the Liberals released a letter about the mining sector during the 2015 election that noted, "a Liberal government will set up an independent ombudsman office to advice Canadian companies, consider complaints made against them and investigate those complaints where it is deemed warranted."

Nearly two years into their mandate, the Trudeau regime has yet to follow through on any of their promises to rein in Canada's controversial international mining sector. In fact, the Liberals have largely continued Harper's aggressive support for mining companies.

If the Liberals are prepared to openly back Barrick in Tanzania, one wonders what exactly a firm would have to do to lose Trudeau's support.

Source: Canada Just Can't Quit Its Most Abusive Mining Company
Who sets Cooperate Social Responsibilities Scenario? The Tanzania government; the mining companies or jointly? Do our laws say anything regarding locals' lives betterment from national or international investments?
 

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