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UPDATE 1-Tanzania's President Magufuli turns up heat in mining dispute

Published 2017-07-21, 12:18 p/m
© Reuters.  UPDATE 1-Tanzania's President Magufuli turns up heat in mining dispute
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By Fumbuka Ng'wanakilala

DAR ES SALAAM, July 21 (Reuters) - Tanzania's President John Magufuli has threatened to shut all gold mines in the country if mining companies delay talks to resolve a dispute over billions of dollars in back taxes the government says they owe.

Magufuli, nicknamed "the Bulldozer" for his forceful leadership style, is increasing pressure on the mining companies, which include Acacia Mining ACAA.L , the biggest gold miner in the country.

"I have launched an economic war," Magufuli told a cheering crowd at a public rally in the northwestern town of Kigoma.

"We have asked them to come for talks ... they have agreed to come. But if they delay those talks, I will close down all the mines," Magufuli told the crowd.

Magufuli has sent shock-waves through the mining community in Africa's fourth-largest gold producer since his election late in 2015 with actions he says are aimed at ensuring that mining companies pay a fair share of taxes.

Tanzania has passed new laws to increase mining taxes, to force companies to re-negotiate their contracts and to allow the state to own up to 50 percent of shares in mining companies.

In March, it introduced a ban on exports of copper concentrate or mineral sand for processing abroad, which hit Acacia. the ban, London-listed Acacia, majority owned by Barrick Gold ABX.TO , has nearly halved in value. The company suspended its dividend for the first time in February. Mining said on Friday it aimed to reinstate its dividend in early 2018 if Tanzania ended the concentrate export ban. Acacia's shares were down more than 17 percent on Friday.

Acacia has been having trouble renewing work permits for its international staff in Tanzania, Chief Executive Brad Gordon told Reuters.

""We were having difficulty getting work permits renewed. But no foreign nationals have been asked to leave the country," Gordon said. government has also accused Acacia of evading taxes worth billions of dollars by under-declaring export volume and value of its minerals.

Acacia denies the allegations. The company said on July 4 it was seeking international arbitration to resolve the dispute.

"Acacia is fully cooperating with these investigations and has provided extensive documentation and information to the investigating authorities," Gordon said.

AngloGold Ashanti ANGJ.J , which owns Tanzania's biggest open-pit mine, Geita, also said last week that it was filing for international arbitration after the overhaul of the mining laws. Gold Corp. ABX.TO , which owns a 63.9 percent stake in Acacia, agreed last month to hold talks with the government to resolve the tax evasion claims against Acacia. talks are yet to begin but officials said they could start "soon." The president said he had taken on multinational companies for the sake of the country, where mining contributes around 4 percent of the gross domestic product.

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