Acacia hit as Tanzania bans key ore exports

Shares in Acacia Mining, the London-listed gold miner in merger talks with a Canadian rival, plunged by as much as a fifth on Friday after Tanzania unexpectedly banned exports of gold and copper ore.

The east African country’s ministry of energy and minerals said the embargo — which also covers, copper, nickel and silver ores — would take effect immediately.

“The ban intends to make sure that mineral value-addition activities are carried out within Tanzania,” the government said in a statement.

Like other resource-rich nations, Dodoma wants to make sure that raw materials produced from its mines are also processed in the country.

Shares in Acacia, which is majority owned by Barrick Gold, fell by as much as 20 per cent, before recovering. They ended the day down 72p, or 13 per cent, at 461p, reducing the company’s market value to £1.9bn.

“At this stage, Acacia has ceased exports of gold/copper concentrate and is urgently seeking further clarification from the ministry of energy and minerals,” the company said. About a third of its revenues come from mining copper and gold ore in Tanzania.

Tanzania’s decision is the latest in a series of national bans on exports of minerals as prices of commodities rebound after a multiyear slump. Indonesia introduced new rules this year, forcing miners to convert to special licences for exports. The Philippines is also considering restricting exports of raw materials.

Peter Mallin-Jones, an analyst at advisory house Peel Hunt, said the ban was most likely to affect Acacia’s exports of copper concentrate, because the company produces gold bars in Tanzania.

Acacia produced about 40,000 tonnes worth of copper concentrate last year, he said. Copper is often found alongside gold and produced as a byproduct.

But Mr Mallin-Jones said the real reason for the ban could be a dispute between Tanzania and Acacia over taxes. “This is an artificial argument used to create a lot of leverage,” he said.

Shares in Acacia surged earlier this year after it confirmed merger discussions with Canada’s Endeavour Mining.

Since taking power 15 months ago, John Magufuli, Tanzania’s president, has behaved unexpectedly on several occasions with regard to trade policy.

He has repeatedly refused to sign a trade deal between the east African Community, of which Tanzania is a member, and the EU, even though it was agreed by both sides before he took office.

Mr Magufuli says his actions are motivated by wanting to develop domestic industries but analysts say they are unlikely to be in the country’s long-term interests.