It remains unclear how Tanzania arrived at the basis of allegations that Acacia Mining plc wildly misreports the metal content in concentrates it exports in a US$190 billion dispute that began in July.
Acacia halted exports of gold and copper concentrate from Tanzania earlier in the year, after the country's Ministry of Energy and Minerals announced a ban on exports of concentrates and ores for certain metals. In mid-July, Acacia agreed to an increased royalty rate of 6% on metallic minerals under Tanzania's new mining legislation.
The company's Tanzanian operations include the Bulyanhulu, Buzwagi and North Mara gold mines.
The Tanzanian government did not respond to multiple inquiries for comment by S&P Global Market Intelligence, while Acacia and its controlling owner Barrick Gold Corp. respectively said they didn't know about the method used to assess concentrates or declined comment. Barrick is leading negotiations with the government.
Tanzania has said Acacia owes US$40 billion in back taxes and US$150 billion in penalties and interest. The charge — suggesting fraud on a massive scale — is based on an analysis by two government mandated committees that issued reports this year, known as the First Committee Report and the Second Committee Report.
In the first report, the government purports to show that concentrates Acacia produces from its Tanzania operations contain, by an order of magnitude, more gold than Acacia claims, along with other elements it does not report, based on its own analysis of the concentrates.
Acacia has strongly disputed the analysis, noting the metal concentrations would suggest it owns the world's largest two gold mines and that the properties host metals that are not in its deposits. It also flies in the face of its own tests of the ore that say otherwise, the company says.
This has raised the key question of how the Tanzanian government tested Acacia's concentrates. But present and former Tanzanian officials have not responded or answered questions by S&P Global Market Intelligence about the methods that were used.
The office of Tanzanian President John Magufuli did not respond to several emails, a phone call or a tweet requesting comment.
Abdulkarim Mruma, who headed the First Committee Report, did not respond to emails asking for comment and could not be reached by phone.
Nehemiah Osoro, who led the Second Committee Report, also declined comment, saying the reports were now in the hands of the government.
Tanzania's former Minister of Mines, Sospeter Muhongo, who was fired over the first report, responded by email: "Very strange indeed. Why don't you ask those who did the analysis!!! Very unprofessional! Strange!"
It was not clear if Muhongo was calling the situation strange or calling into question the request for comment. He did not respond to follow-up inquiries.
Hardolph Wasteneys, a Canadian geologist who is following the situation closely and has a strong knowledge of mineral testing, speculates that the Tanzanian government may have used unreliable technology to test gold in making its assessment.
He outlined his view in The Northern Miner and also spoke to S&P Global Market Intelligence about it. Barrick said it was aware of Wasteneys' view but declined comment.
Wasteneys notes the reports, which he says he has seen, do not describe the method used to test concentrates, and he wonders, based on what he views as strange findings, if the government used X-ray fluorescence, or XRF, analysis.
The technology is widely deployed in exploration and is widely depended on and useful. But as Wasteneys and another gold exploration geologist confirmed to S&P Global Market Intelligence, it can be very inaccurate in detecting gold. The geologists note it is accurate for other metals like copper and zinc and also sulfur and iron.
Indeed, Wasteneys notes that the First Committee Report, which suggest much higher gold numbers in Acacia concentrates than Acacia has claimed over the decades, accurately describes the content of other metals as reported by Acacia and for which XRF is known to be accurate in testing.
Not so for gold. XRF has trouble with it.
"You're actually not analyzing gold," Wasteneys explained. "You're actually analyzing pathfinder elements." He was referring to other elements that suggest the presence of gold or a gold deposit.
That can lead to wild mistakes in analysis, he and other geologists say, if you're not careful.