Activists Urge Tanzania To Clean Gold Trade, Exclude Conflict Link

Rights activists said Wednesday that Tanzanian, Africa's fourth largest gold producer, must impose better controls on gold exports to ensure the country is not used as a conduit for smuggled minerals from volatile Eastern Congo.

Tanzania is among a number of African countries required to verify the sourcing of its mineral exports under U.S. legislation, which comes into force in April, and is designed to stop the sale of illegally mined minerals from Africa that fund conflicts.

"In order to fulfill the provisions of the U.S. law, Tanzania has a responsibility to differentiate between conflict gold coming from Congo and the legitimate gold coming from its own mines through a rigorous independent monitoring system," said Sasha Lezhnev, an expert with U.S.-based advocacy group, Enough Project.

Gold mining companies operating in Tanzania and the Tanzanian government are calling for the country's removal from the list. Tanzania's Chamber of Minerals and Energy has already written an appeal to the U.S. in an effort to protect the country's gold exports.

Ami Mpungwe, the head of the gold industry body in Tanzania said that the new legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, could lead to stigmatization of responsibly produced gold in Tanzania.

The plea comes at a time when Kenyan and Tanzanian authorities are investigating a gold smuggling racket after seizing large amounts of gold smuggled from Eastern Congo last week, according to government officials.

But Mike Davis, the head of the Conflict Resources team at rights group Global Witness, said the risks of damage to the Tanzanian mining sector by the new legislation have been "greatly exaggerated".

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 Mining Ltd. (RRMGGF).

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]