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Tanzania suspends granting of new mining licences

Magufuli concludes his two-day visit to Mwanza on July 4th. (Image courtesy of Tanzania’s State House.)

Tanzanian President John Magufuli has ordered the suspension of new mining licences until further notice, further complicating an already bitter dispute between the government and miners operating in the country.

The decision, which includes freezing the renewal of expired permits, comes on the heels of the passing of two bills giving the country’s the government the right to renegotiate or revoke existing licences.

Decision comes on the heels of the passing of two bills giving the country’s the government the right to renegotiate or revoke existing licences.

Speaking at a public rally on Tuesday, Magufuli said he had decided to rush through bills because the country was in the midst of “an economic war,” Reuters reported.

Mining contributes 3.5% to the gross domestic product of Tanzania, which is Africa’s third-largest gold producer. The government, however, wants to increase that piece of the pie to 10% by 2025 thanks to the new laws.

The legislation could further complicate Acacia Mining’s (LON:ACA) situation in the country, which has already been accused by the government of operating illegally and evading taxes for years.

Currently, world’s largest gold miner Barrick Gold (TSX, NYSE:ABX), which holds a 64% interest in Acacia, is holding talks with local authorities in the hopes of reach a settlement over the claims.

The laws will also impact the operations of other mining companies operating in Tanzania, such as AngloGold Ashanti (JSE:ANG), Petra Diamonds (LON:PDL) and Shanta Gold (LON:SHG).

Some of them have already expressed their disappointment and accused President Magufuli of setting unfair restrictions on them by raising fines and demanding higher tax contributions.

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