Tanzania: Miners ordered to sell 20% of their gold to the central bank
Tanzania’s mining regulator has ordered all gold mining firms and traders to sell at least 20% of their gold to the country’s cen- tral bank. This directive, part of a broader strategy to diversify the Bank of Tanzania’s (BoT) foreign exchange re- serves, took effect in October, following the enactment of new mining regulations.
The central bank’s gold-buying pro- gramme began last year, driven by pres- sures on the Tanzanian shilling. In the 12 months leading up to June 2024, the BoT purchased 418kg of gold. The bank’s goal for the current financial year is sig- nificantly more ambitious, with plans to acquire six metric tons of gold as part of its efforts to bolster reserves.
The Tanzania Mining Commission re- quires miners and traders to sell their reserved gold to two major mineral re- fineries: Eye of Africa Ltd, located in the capital city of Dodoma, and Mwanza Pre- cious Metals Refinery Ltd, in the northern city of Mwanza.
The initiative comes as Tanzania’s for- eign exchange reserves stand at $5.29bn, which is sufficient to cover 4.3 months of imports of goods and services. By in- creasing its gold reserves, Tanzania is seeking to stabilise its currency, which has depreciated by nearly 8% against the US dollar this year.
Tanzania is one of Africa’s largest gold producers, with major players in the sec- tor including AngloGold Ashanti Plc and Barrick Gold Corp. The country’s gold sector has historically been a critical con- tributor to its economy, with gold exports generating significant foreign exchange earnings.
Tanzania is also strengthening its mining sector. In recent years, the gov- ernment has introduced several reforms aimed at increasing the sector’s contri- bution to the national economy, includ- ing revising mining laws and enhancing oversight of mineral exports.
Equity market grows by 22%
From January to September, the Tanza- nian stock market’s total capitalisation increased significantly, climbing from $5.86bn in January to $7.13bn in Septem- ber – a remarkable 22% jump.
This surge is a reflection of improved investor confidence, driven by stable macroeconomic conditions and strong performances in key industries such as banking and beverages. The domestic market capitalisation also grew by 7% during this period, reaching $4.89bn by September.
Activity in the bond market was ro- bust as well, with the value of outstand- ing government bonds rising by 18.5%, from $8.12bn in January to $9.62bn in September.
Notably, however, the market for sus- tainable bonds saw no change, with the value remaining at $184.03m – making it an area that may present opportunities for growth in the near future.
Several companies posted notable price movements over the first nine months of 2024, with particularly strong gains in banking, beverages, and insurance. CRDB Bank, one of Tanzania’s largest finan- cial institutions, saw its stock price rise by 39.13%, climbing from $0.18 to $0.25. East African Breweries Limited, a cross- listed company, experienced even more impressive growth, with its stock price soaring by 82.97%, from $0.73 to $1.34.
In the insurance sector, Jubilee Hold- ings Limited (JHL) saw its share price increase by 22.64%, from $1.18 to $1.45, reflecting positive investor sentiment toward the financial services industry.
Meanwhile, KCB Bank, another cross- listed entity, emerged as one of the top performers, with its share price more than doubling, up by 108.57% from $0.14 to $0.29. Domestic companies like NICO also experienced significant gains, with its share price rising by 50%, from $0.20 to $0.30.
However, not all companies fared well during this period. Swissport Tanzania (SWISS) saw its stock price decline by 16.67%, from $0.53 to $0.44, possibly due to increased competition within the avia- tion sector.
Source: https://www.zawya.com/