UPDATE: Tanzania Seeks To Protect Gold Exports Over Conflict Minerals Link

(Updates with activists comments)

Tanzania's Chamber of Energy and Minerals said Tuesday it has urged the U.S. to remove the country from a list of nations linked to conflict minerals in eastern Congo to try to protect its gold exports.

The move by the U.S. could tarnish gold produced in Tanzania, which would affect exports from Africa's fourth largest gold producer, said Ami Mpungwe, the head of the industry body representing mining companies operating in Tanzania.

"Tanzania is not a source of conflict minerals, and there is no reason we should be affected by the proposed restrictions," Tanzania deputy energy and minerals minister Adam Milima said of the rules, which are part of the U.S. Dodd-Frank financial regulatory reform bill passed last year.

Among the conflict minerals cited in the legislation are gold, cassiterite or tin ores and coltan from Congo and at least nine other countries. Congo is Africa's largest tin producer, supplying around 5-7% of global output.

Mike Davis, the head of Conflict Resources team at global advocacy group Global Witness, told Dow Jones Newswires a bulk of the gold mining in Tanzania is in large industrial operations that should have little difficulty meeting the requirements of Dodd-Frank.

"It's important to keep in mind here that the act is not about embargoing or black-listing countries, it is about reporting on supply-chain controls," he said. "It is unlikely that it is going to require the major gold miners in Tanzania to gather information that they do not already have. The only difference is that they will now have to disclose" it.

However, he added that Tanzania's main port of Dar Es Salaam along with Kenya's Mombasa is a key gateway for Congolese conflict minerals leaving the continent. "It is crucial that the Tanzanian government takes steps to ensure that minerals that have benefitted the armed groups in eastern Congo...do not pass through its territory," he added.

U.S.-based companies beginning April 1 will be required to ensure the minerals they procure from Congo and nine other adjoining countries aren't from rebel-controlled mines. The legislation is intended to stop illegal mineral dealings from funding the conflict in eastern Congo, which is blamed for the killing of at least 5 million people since the late 1990s.

Companies operating in Tanzania include London-listed Africa Barrick Gold (ABG.LN), a unit of Canada's Barrick Gold Corp. (ABX); South Africa-based Anglogold Ashanti Ltd. (AU); and Australia-based Resolute Ltd. (RES.AU).

Last year, Tanzania's 2010 gold output rose by 9% to 44.6 metric tons.

-By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615 [e-mail]