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Judegment Day At The High Court London
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Tuesday, 17 December 2013

Who owns and controls Tanzania’s lucrative gold mines? Prof Muhongo hits out at Mengi!



By The Citizen Reporter
Posted  Tuesday, December 17   2013 at  07:47

In Summary

  • From 1996 when Tanzania  introduced large-scale mining until today, about $5bn has been invested in the mining sector, with gold taking about 90 per cent. About 95 per cent of the rich Lake Victoria Gold Belt is owned by three companies, while the remaining 5 per cent is owned by small-scale miners.

“Mengi holds the third position by having an area that is three times the size of Dar es Salaam City...However, he is doing nothing to benefit Tanzanians. Instead, he is enriching himself” Prof Sospeter  Muhongo, Minister for energy and minerals


Dar es Salaam. As the debate on participation in the $430 billion natural gas sector moves from real issues to personal attacks, data obtained by The Citizen newspaper tell the other side of the story that is often deliberately skipped to conceal the truth about ownership in Tanzania’s lucrative mining industry.

According to Energy and Minerals minister Sospeter Muhongo, business mogul Reginald Mengi, who has been criticizing the government for failure to empower locals to participate in the natural gas sector, owns huge tracts of gold and tanzanite mining land.

Prof Muhongo, one of the few geology and earth science experts in the country, says the very same Mr Mengi who is complaining about locals being left out in natural gas sector is the leading investor in the mining industry who owns a big chunk of the country’s lucrative minerals. 

According to Prof Muhongo, Mr Mengi has many prospecting licences, which he has been holding for many years without developing any viable gold mine.

Prof Muhongo described Mr Mengi as a mere middleman or an auctioneer who holds many minerals licences, hoping to auction them to foreign investors.

To Prof Muhongo, Mr Mengi, who was named by Forbes Magazine last month as one of the richest persons in Tanzania with a net fortune of $500 million, should be the last man to complain about being left out of the lucrative natural gas sector.

But on Sunday, just a day before President Jakaya Kikwete was scheduled to chair a private sector meeting yesterday, Mr Mengi hit back at Prof  Muhongo, refuting almost everything the minister said about him a week ago.

Mr Mengi, who is also chairman of the Tanzania Private Sector Foundation (TPSF), but who spoke on his behalf as a businessman, defended himself against allegations of greed and selfishness Prof Muhongo levelled against him, in a bid to clear the air before yesterday’s meeting. Speaking to journalists in Dar es Salaam, Mr Mengi said there were inaccuracies in what Prof Muhongo has said about him.

He recalled that early in September, Prof Muhongo was quoted as saying that Mr Mengi lacked patriotism and wanted to act as a middleman in selling blocks of the country’s natural resources. “I would like to clarify the matter so that I don’t go to the meeting tomorrow (yesterday) with statements made by Prof Muhongo uncorrected,” he said.

“The truth is that I am not selfish, secondly I have never asked for any favour to be given blocks of natural gas…what I’m doing is fight for Tanzanians in general,” Mr Mengi said.

During a public symposium held at University of Dar es Salaam (UDSM) last week, Prof Muhongo, who was among the key speakers, said Mr Mengi owned land that was three times the size of Dar es Salaam.

“However, he is doing nothing to benefit Tanzanians, instead, he is enriching himself,” Prof Muhongo said. But Mr Mengi on Sunday said Prof Muhongo gave wrong statistics and data about his ownership of mining land.

“The truth is that I own the sites under shareholding with my fellow Tanzanians; one mining site is for tanzanite mining and its area is less than one square kilomitre, and not three times the size of Dar es Salaam as he said,” Mr Mengi clarified.

Who owns Tanzania’s minerals?

A quick analysis conducted by The Citizen newspaper established that from 1996 when Tanzania, under the leadership of President Benjamin Mkapa, introduced large scale mining till today, about $5 billion has been invested in the mining sector, with gold taking about 90 per cent of the investment.

The Citizen has reliably established that 95 per cent of the rich Lake Victoria Gold Belt is owned by three companies, which are Anglo Gold Ashanti, African Barrick Gold and Resolute Ltd. The rest five per cent of the Lake Victoria Gold Belt is owned by thousands of scattered and poorly equipped small-scale miners.

From 1996 till today, a total of six large-scale gold mines were established in the lucrative lake Victoria gold belt, which holds about 90 per cent of Tanzania’s gold reserves.

The mines are North Mara, Buzwagi, Bulyanhulu, Tulawaka, Golden Pride(Resolute Ltd), and Geita Gold Mine. African Barrick Gold(ABG), a profit-making company with over $1 billion in revenue and a market capitalisation of over $900m and which is Tanzania’s largest gold producer and one of the top five producers in Africa by revenues, owns four gold mines.

ABG used to own four gold mines before it sold its Tulawaka gold mine to State Mining Corporation (Stamico) early this year. ABG also has plans to open a new gold mine in Sengerema District called Tusker Nyanzaga, which it acquired in 2010.

Golden Pride located in Nzega town was owned by a foreign company called Resolute Ltd, and was the first gold mine to be opened in Tanzania in the 1990s. The mine has announced the closure of production after reaching its last gold ore reserve.

Geita gold Mine is owned by Anglo Gold Ashanti Ltd, which is a South Africa-based company that acquired Ghana’s Ashanti Gold Fields in 2000.

Anglo Gold’s reserves in Tanzania

AngloGold Ashanti is a much larger company with a market capitalisation of $4.6 billion, which mines in South Africa, several countries in West Africa and Tanzania, as well as on other continents.

Geita is the largest of AngloGold Ashanti’s seven open-pit mines in Africa according to a report released by a South Africa-based company released this year, which The Citizen obtained a copy.

Prior to April 2004, Geita was managed under a joint venture agreement between Ashanti and AngloGold. Since the merger of the two companies, Geita is a wholly-owned subsidiary of AngloGold Ashanti.

It was initially built at the cost of $160 million and started operations in July 2000 with a production capacity of 600,000 ounces a year.

The Geita gold mine is located approximately 910km from Dar es Salaam in the Lake Zone of northern Tanzania. The tenements are situated within the Sukumaland Greenstone Belt of the Lake Victoria goldfields, which hosts other gold mines including Golden Pride, Bulyanhulu, Tulawaka and Buzwagi.

According to details gathered by The Citizen, this geological terrain is considered to be one of the most productive Archaean Greenstone Belts in east Africa. The Geita Greenstone belt is a segment of the Sukumaland Greenstone Belt. This Archaean sequence strikes east-west, is 60km long and up to 15km wide.   Data from Anglo Gold Ashanti show that by the end of 2012, Geita Gold Mine has provable gold reserves of 6.88 million ounces valued at gross value of $8.994 billion at the price of $1,300 per ounce, which was used by the company during the valuation of its resources.

Yesterday, gold price tumbled to $1,234 per ounce down from $1,900 in January, this year.

ABG minerals reserves and resources in Tanzania

ABG has established what it calls a Mineral Reserves and Resources Committee which is responsible for reviewing and monitoring ABG’s processes for calculating mineral reserves and resources and ensuring that appropriate internal controls are applied to mineral reserves and resources calculations.

According to ABG’s report available on its website, mineral reserves have been calculated using an assumed long-term average gold price of $1,500.00 per ounce, a silver price of $28.00 per ounce and a copper price of $3.00 per pound.

In its minerals reserve and resources assessment done last year, ABG reported that it has total gold reserves (proven and probable) of 16.6 million ounces valued at $24 billion.


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