After years of mining experience, extracting the finest of ‘wealth’ in the sub-Saharan state, it seems the source will be compelled to make its hardest choice after being slapped and slammed with the biggest tax in history.
Having experienced twists and turns, trials and troubles over time since the inception of the year, Acacia Mining Plc is between a rock and a hard place to salvage its business after Tanzania charged it with a $40 billion tax bill. On top of that, adding to the pain is another $150 billion in interest and penalties.
The gold mine company had been the subject of fraud and breach of work ethics with millions swinging in pockets of ministers. Irregularities in the work relationship towards the Government of Tanzania has found the company in double jeopardy after the President of the state lost his faith in the operations carried out, in terms of monetary gesture.
The charge covers alleged under-declared export revenues from the Bulyanhulu and Buzwagi mines over periods between 2000 and 2017, Acacia said in a statement.
Acacia reiterated that it has fully declared all revenues.
The giant tax bill is the latest twist in an increasingly ugly spat between the government and Acacia. In March, Tanzania banned exports of unprocessed gold and copper, a move Acacia said is costing it about $1 million a day in lost revenue. The situation escalated when the government accused the firm of operating illegally in the country and said mine operators had been evading taxes.
“The company is considering all of its options and rights and will provide a further update in due course,” Acacia said in the statement.
On Friday, Acacia said the dispute had depleted its cash balance to $176 million from $318 million a year earlier and that it will have to shutter its flagship Bulyanhulu mine at the end of this quarter if the situation is not resolved.
To put the size of the bill in perspective, Acacia had total revenues of $1.05 billion last year and has reported sales of a total of $7.7 billion since 2009.