The Bank of Tanzania (BoT) also indicates that there is an increase in volume of gold produced locally. The rise in export value of gold comes amidst a controversy over the government's ban on the export of mineral concentrates that has affected production at Acacia, Tanzania's largest gold miner.

 

BoT's Monthly Economic Review for March released recently also shows that the mineral forms the major goods export because of reduced exports of manufactured goods.

 

In the year to February 2017 gold exports amounted to $1.46 billion (Sh3.2 trillion) being an increase from $1.16 billion registered in the year to February 2016. "Gold export improved by 25.6 per cent to $1.46 billion in the year ending February 2017 due to recovery in price at the world market and increase in volume," the BoT report reads in part.

 

On the contrary, the report shows, the annual export value of manufactured goods fell to $1.0 billion (Sh2.2 trillion) in the year to February 2017 from $1.32 billion in the year ending February 2016 due to a reduction in the export of edible oil, as well as iron and steel products.

 

Gold exports had dominated exports of goods for more than a decade until 2013, when it started to decline, owing to falling prices at the global market and its place taken by manufactured goods. Despite regaining its position as Tanzania's largest export, gold is still peforming poorly.

 

The mineral reached its peak in 2012, when it passed the $2 billion annual export value mark. The export value then started declining in 2014, when it registered $1.5 billion in the year to February. It continued declining reaching $1.16 billion in the year to February 2016.

 

Price of gold increases

 

The price of gold has recovered in the last few years as investors shifted to the precious mineral for safe haven amid growing volatility in global equity markets.

 

The BoT reports indicates that the price of a troy ounce of gold increased by 10 per cent from $1,192.1 (Sh2.4 million) in February 2016 to $1,234.2 in February 2017. This was well below the $1,742 per troy ounce of February 2012, when gold exports were above the $2 billion mark.

 

Increase in volume

 

The BoT report does not give details of gold export volumes, but financial results released by Acacia revealed an increase in gold production in its three mines in the first quarter of this year.

 

The report shows that gold production in the first quarter increased by 15 per cent compared to the first quarter of 2016 to 219,670 ounces.

 

Acacia revenue also increased by 6 per cent to $234 million.

 

AngloGoldAshanti, Tanzania's second largest gold miner that operates Geita Gold Mine, said in its latest report that production reached 134,000 ounces in the quarter ending December 2016 compared to 125,000 ounces produced in the previous quarter.

 

The Tanzania Mineral Audit Agency says in its latest report that the country exported 1.37 million troy ounces with the value of $1.63 bilion. Royalty paid by the gold miners was $63.2 million (Sh104.9 billion), while total taxes paid by gold miners to the government was Sh355.3 billion.

 

Background

 

Tanzania's mining sector is gold focused and ranks as Africa's fifth largest producer after South Africa, Ghana, Sudan and Mali. Production reached 40.4 mt/y in 2011 from 35.6 mt/y in 2010.

 

Tanzania's top gold producers are: Acacia, which now operates three mines in northwestern Tanzania, South Africa-based gold producer AngloGold Ashanti, owning the Geita open mine located in Geita Region, Shanta Gold operating the Luika Mine, Canaco Resources and Lake Victoria Mining Company, Tanzania Royalty operating the Buckreef Gold Mine and Stamico, operating the Tulawaka Mine. The Golden Pride mine, which was being operated by the Australia-based Resolute Mining, was closed down in 2014.

 

Acacia operates Bulyanhulu, Buzwagi and North Mara.

 

Tanzania opened its mining sector to large-scale foreign investors in 1998, following the enactment of the Mining Act, 1997, after it became the third largest gold mining country in Africa, but was later overtaken by Mali and, in 2015, by Sudan, to become the fifth largest.

 

In 2010, the country enacted a new law, the Mining Act 2010, which sought to enable the government to get more revenue from the sector. The Act increased royalty of minerals to 4 per cent (gold and other metallic minerals), 5 per cent (uranium, gemstones and diamond).

 

The Mining Act, 2010 also limited licences to mine gemstones to Tanzanians only regardless of the size of the operation "except where the minister determines that the development is most likely to require specialised skills, technology or a high level of investment in which case the license may be granted to an applicant so long as the non-Tanzanian participation element is no more than 50 per cent," according to section 8(4).

 

The Act also gives the minister the powers to prescribe a standard model form the mining development agreement for all projects exceeding $100 million. The Mining Act, 1998 had not given the minister responsible for mining powers to prescribe the MDA. But the Act also changed the way royalties are calculated from the net value to gross value.

Source : allafrica.com