TANZANIA: AFRICAN BARRICK GOLD CONTRIBUTION TO STATE COFFERS, ECONOMY DWINDLE

AFRICAN Barrick Gold (ABG) Chief Executive Officer, Mr Brad Gordon, addresses reporters on the firm's report on Economic and Tax Contributions in Tanzania at a news conference in Dar es Salaam yesterday. He is flanked by Ernst & Young Country Managing Partner, Mr Joseph Sheffu and Associate Director, Transaction Advisory Services, Mr Chacha Winani.

AFRICAN Barrick Gold's contribution to the economy is declining due to a global gold price decline that has forced the largest mining company in the country to review its operations.

According to a study by Ernst & Young, a global accounting firm, ABG contribution to the economy for 2013 was 1.4tr/- (US$ 855 million) representing about three per cent of the economy down from about 1.62tr/- (U$ $980 million) contributed in 2012 which comprised of slightly over three per cent of the economy.

Total tax contribution of the mining company is estimated to reach 316bn/- (US$ 197 million) in 2013 down from estimated amount of 450bn/- (US $275) million in 2012.

The study revealed that indirect and induced contribution of the African Barrick Gold for 2013 reached 853bn/- (US$ 531million) down from 1.17tr/- (US$706 million) recorded in 2012.

In 2012, ABG made a total contribution of over $980 million to the economy which represents over three per cent of total economy. It comprised of a direct contribution of $275 million and indirect and induced contributions of $706 million.

In addition ABG made a total tax contribution of $223 million which comprises direct tax contributions of $161 million and indirect and induced contributions of $62 million.

The largest gold mine had a slight increase in gold production last year where it produced 642,000 ounces of gold, a slight increase from the 2012 figures despite the closure of the Tulawaka mine in 2013.

From last year, the gold mining company conducted a major operation review as a cost cut measures due to declining global gold prices.

It identified over US$185 million of cost savings across the business, ranging from reductions in capital spent, exploration, corporate overheads and organizational structures.

The Operational Review has been described as a great success as it removed US$129 million of cost from the business by the end of 2013.

African Barrick Gold is Tanzania's largest gold producer and one of the largest gold producers in Africa with three operating mines -- Bulyanhulu, North Mara and Buzwagi -- all located in Northwest Tanzania.

In 2103 mining contributed 3.3 per cent of the economy and employed over 15,400 workers. Tanzania is currently the fourth largest gold producer after South Africa, Ghana and Mali.