Tanzanian President Fires Mines Minister After Minerals Audit

(Bloomberg) -- Tanzanian President John Magufuli fired Mines Minister Sospeter Muhongo after an audit of containers of mineral sands showed exports had been understated.

An investigation initiated by Magufuli in March found that 277 containers held as much as 15.5 metric tons of gold, instead of the 1.1 tons that had been declared, the president said Wednesday in a speech broadcast live on state television. Magufuli also disbanded the Tanzania Minerals Audit Agency’s board, dismissed its chief executive officer and asked the authorities to investigate those responsible.

“The energy and minerals minister’s position will be filled at a later date,” the presidency said in a statement emailed from Dar es Salaam, the commercial capital.

Magufuli banned mineral exports in March and ordered an audit of the mining industry to identify loopholes that he said result in income losses as he tries to boost revenue from the industry for the state. He’s also invited investors to build a smelter in the East African country to process its natural resources. The country is Africa’s third-biggest gold producer, with companies including AngloGold Ashanti Ltd. and Acacia Mining Plc extracting the metal, and also produces copper, iron, zinc and diamonds.

Earlier on Wednesday, Magufuli asked Muhongo to resign after receiving the report on the contents of containers seized at the port of Dar es Salaam in March.

“I really like Professor Muhongo and he is a friend of mine, but on this he needs to rethink and reassess without delay,” he said.

Acacia Plunges

The containers, which had mineral sands from mines including Buzwagi, owned by London-based Acacia, were located at a privately run terminal and awaiting customs procedures before being shipped overseas. Acacia shares dropped as much as 17 percent to 360.40 pence in London, the biggest intra-day decline since March 3. The company said it declares fully everything of commercial value and pays appropriate royalties and taxes.

The ban on unprocessed metals should remain in place, according to the eight-member committee that carried out the investigation. The government should also construct a smelter as soon as possible, it recommended.

“The government should retain the minerals-export ban until royalties reflective of the full value of the sands have been paid in full,” Abdulkarim Mruma, the committee chairman, said at the briefing on Wednesday.

The containers held as much as six tons of copper instead of the four tons declared and had many unrecorded minerals including iridium, iron and zinc, Magufuli said.

“We have been given all these natural resources, but we are giving them away for free,” he said. “This pains me a lot. It’s embarrassing.”

Magufuli has also ordered a separate probe into mineral exports over the past 19 years. That report will be ready soon, he said.

--With assistance from Liezel Hill

To contact the reporter on this story: Omar Mohammed in Johannesburg at omohammed4@bloomberg.net.

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net, Helen Nyambura-Mwaura