Acacia Mining plc total economic and tax contributions in Tanzania, 2014 Prepared for Acacia Mining plc April 2015
Executive Summary EY updated its 2014 study of Acacia’s 2013 economic contributions to the ► Tanzanian economy to reflect the company’s 2014 operations in the country from their three gold mines in Tanzania In 2014, Acacia’s total direct, indirect, and induced economic contribution in ► Tanzania included: 54,000 jobs; ► US$459 million of labour income; ► US$678 million of value added (GDP); and ► US$488 million of purchases from Tanzania suppliers ► In total, Acacia’s total tax contribution in 2014 was an estimated US$179 ► million Acacia is a high wage employer, paying an average annual wage of more ► than 11 times the national average For each direct Acacia employee, 11 additional jobs are supported in the ► broader Tanzanian economy Page 2 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
Acacia produced half of Tanzanian gold exports from 2005 through 2014 In 2014, mining directly comprised 3.3% of Tanzanian GDP and employed over 15,000 workers, supported by a gold ► mining sector that ranked fourth in Africa in terms of production volume Gold is the largest mineral commodity in Tanzania, with gold exports comprising 89% of the value of total mineral ► exports in 2014 In 2014, Acacia produced 718,000 ounces from its mines in Tanzania — a significant increase from 2013, when ► production was 642,000 ounces This was in spite of the closure of the Tulawaka mine in July 2013 ► Acacia and total Tanzanian gold production, 1998-2014 2001-2004 2005-2014* Acacia avg. share: 23% Acacia avg. share: 49% 2.0 1.8 Millions of troy ounces 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Acacia gold production Non-Acacia gold production in Tanzania * 2014 total Tanzanian gold production data are not yet available. 2014 represents only Acacia gold production for the year. 49% represents Acacia’s average share of Tanzanian gold production from 2005 -2013. Source: US Geological Survey; Acacia data. Data provided by Acacia management were not independently audited by EY. Page 3 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
Acacia spent more than US$878 million in Tanzania in 2014 In 2014, Acacia spent more than US$878 million in Tanzania to operate its mines ► Expenditures included payments to employees as wages and benefits, to governments as taxes, ► and to communities as purchases from local suppliers and social investments Of Acacia’s US$688 million of supplier purchases, US$488 million ( 71%) of goods and services were ► purchased from suppliers in Tanzania Composition of Acacia’s expenditures, 2014 Millions of 2014 US dollars Corp. income tax, royalties, net VAT payments, and customs & excise taxes; US$49m (6%) Employee payroll costs, incl. taxes; US$141m (16%) Total $878mm Suppliers, contractors & communities; US$688m (78%) Source: Acacia data. Data provided by Acacia management were not independently audited by EY. Page 4 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
Acacia’s total GDP contribution of US$678m comprised 2% of Tanzanian GDP Induced (consumer-related) US$198m Indirect Total GDP (supplier-related) contribution US$290m US$678m Acacia US$190m Note: 2014 Tanzanian GDP was approximately US$36.6 billion. Page 5 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
Acacia is a high-wage employer Composition of Acacia’s employee compensation in Tanzania, 2014 Millions of 2014 US dollars Average annual gross wage for Tanzanian nationals employed by $141mm Acacia was Employer payroll taxes, US$16mm US$16,379 (26.7 million Tsh) Employee taxes, US$38mm versus US$1,525 (2.5 million Tsh) Take-home salaries & wages, US$87mm for the Tanzanian economy overall Note: Employee taxes include individual income tax withholding and social security contributions. Employer payroll taxes include employer social security contributions and skills and development levy payments. Source: Acacia data. Data provided by Acacia management were not independently audited by EY. . Page 6 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
Acacia’s strong supply chain and high employee earnings support economic activity Direct Related indirect & induced economic contributions contribution Acacia has a strong domestic supply chain, generating indirect economic activity In 2014, Acacia purchased nearly 71% of operating inputs from other Tanzanian firms, totaling US$488mm in supplier purchases last year Of this amount, US$99mm (14% of total purchases) were from suppliers in the same regions as Acacia mines The indirect economic impact of Acacia’s operations supported an additional Jobs, US$290mm of indirect GDP and 30,500 wage-earning jobs at suppliers compensation, GDP, taxes paid by Acacia & Consumer spending by Acacia and supplier employees supports induced economic activity employees In 2014, Acacia employees earned a total of US$141mm of labour income, averaging nearly US$16,400 per worker – 11 times higher than the national average In 2014, households spent an estimated 87% of their income on goods and services, 71% of which was purchased from Tanzanian businesses. The induced economic impact of Acacia’s operations supported an additional US$198mm of induced GDP and 19,000 jobs at local businesses Page 7 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
Acacia contributed to jobs throughout the Tanzanian economy Distribution of estimated direct, indirect, and induced wage employment, 2014 Construction 1,340 total Direct employment, Acacia Indirect employment Utilities 1,600 Induced employment Prof. & business services 1,920 Health, educ, & public 2,290 admin Manufacturing 4,320 Mining 6,100 Financial services 7,360 Agriculture 8,260 Trade & transport 10,260 Other Services 10,480 0 2,000 4,000 6,000 8,000 10,000 12,000 Note: Figures do not include the estimated number of proprietors in each industry. “Other services” includes personal services, recreation and entertainment, and hospitality and food service. “Trade & transport” includes retail and wholesale trade, tran sportation services, and communications services. Figures may not appear to sum due to rounding. Source: EY analysis based on Acacia data. Data provided by Acacia management were not independently audited by EY Page 8 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
Acacia’s total tax contribution was US$179 million Acacia contributes approximately US$14,700 of Composition of Acacia’s total tax ► contribution from operations, 2014 direct taxes and royalties per employee Millions of 2014 US dollars This amount is approximately 21 times higher than ► the average Tanzanian worker Paid by Acacia US$65mm Acacia’s employees paid an estimated US$53 ► Paid by Acacia employees 53mm million in taxes Indirect & induced tax 61mm The majority of taxes paid by Acacia employees ► Total tax US$179mm (72%) were individual income taxes and social security contributions The remainder includes estimated VAT, excise, ► and other taxes on consumption spending Indirect and Taxes resulting from the indirect and induced ► induced tax Corporate activities of Acacia suppliers and their 34% income & royalties employees totaled more than US$61 million 23% Acacia taxes Acacia’s direct tax contribution includes 2014 ► 37% Customs 4% VAT claims that are anticipated to be Paid by Acacia unrecoverable, totaling nearly US$930,000 employees Other taxes 29% 10% Payments anticipated to be refunded in the ► coming year are excluded from Acacia’s tax contribution Note: Percentages shown are percentages of the total estimated tax impact of US$179 million. Figures may not appear to sum due to rounding. Source: EY analysis based on Acacia data and data published in Tanzania’s national accounts. Data provided by Acacia manageme nt were not independently audited by EY. Page 9 Acacia Mining plc total economic and tax contributions in Tanzania, 2014
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