Magufuli threatens to shut mines if firms delay tax talks

Tanzania's President elect John Pombe Magufuli addresses members of the ruling Chama Cha Mapinduzi Party (CCM) at the party's sub-head office on Lumumba road in Dar es Salaam, October 30, 2015. REUTERS/Emmanuel Herman

DAR ES SALAAM (Reuters) – Tanzania’s President John Magufuli has threatened to close down all gold mines in the country if mining companies delay talks with his government aimed at resolving allegations of tax evasion.

The announcement by Magufuli, nicknamed “the Bulldozer” for his forceful leadership style, marks a further escalation of a dispute with foreign companies like Acacia Mining over export revenues.

“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 a cheering crowd at a public rally in the northwestern town of Kigoma.

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

The government has accused Acacia Mining, the country’s biggest gold miner, 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.    The company’s decision to seek arbitration came a day after Tanzania passed new laws to increase mining taxes, force companies to re-negotiate their contracts and allow the state to own up to 50 percent of shares in mining companies.

    AngloGold Ashanti, 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.    Barrick Gold Corp., 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.

    The 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.

“I have launched an economic war,” he told the crowd at the rally.