Mining extraction: Glencore CEO Ivan Glasenberg met Congolese President Joseph Kabila in March. Picture: MARTIN RHODES
Mining extraction: Glencore CEO Ivan Glasenberg met Congolese President Joseph Kabila in March. Picture: MARTIN RHODES

One by one, the biggest names in African mining are getting squeezed. The tactics might be blunt, but the message is clear: the countries where they operate want a bigger share of the proceeds.

The collapse in commodities through 2015 hobbled some of Africa’s biggest resource economies, stunting growth and leaving budgets short. Since then a recovery in prices has sent the continent’s biggest miners soaring, boosted profits and rewarded shareholders with bumper payouts. But a lack of returns to governments is drawing a backlash from Mali to Tanzania.

Zambia is the latest flashpoint. Africa’s second biggest copper producer slapped a $7.9bn tax assessment on First Quantum Minerals and said it was planning an audit of other miners in the country.

Firms operating in Zambia include units of Glencore and Vedanta Resources.

Next door in the Democratic Republic of the Congo, Glencore is dealing with a dispute over a new mining policy that pushes up taxes, while leading gold producer Mali has reportedly said it might follow the Congolese example.

Tanzania has all but crippled its biggest gold miner, Acacia Mining, a unit of Barrick Gold Corporation, with export bans and a $190bn tax bill.

Barrick also has a copper mine in Zambia, though it had not received any notifications from Zambian authorities about a potential audit or tax reassessment, said spokesman Andy Lloyd.

Countries "want a larger share of the rent. The mining companies are doing extremely well and governments are taking the opportunity to seize a slice of that," Hunter Hillcoat, an analyst at Investec Securities in London, said.

Part of the governments’ motivation is pecuniary. Zambia’s economy, for example, grew in 2016 at the weakest pace since the start of the millennium and the government is struggling with a budget deficit.

Zambian President Edgar Lungu has urged First Quantum and the tax authority to reach a swift resolution.

In the Congo, economic growth has also slowed and the country’s foreign exchange reserves have plunged.

There is a wider dissatisfaction than just money. Many governments feel the companies that operate on their territory have not delivered on their promises, either through operational setbacks or the use of legal tax planning to transfer profits offshore.

In Tanzania, President John Magufuli accused Acacia of underdeclaring export revenue and hit it with a record $190bn tax bill. In the Congo, the state-owned copper miner has accused its joint venture partners, including Glencore’s Katanga Mining, of using inter-company loans to slash the profits that are declared in the country and promised to investigate.

The aggressive rhetoric has been contagious, according to Charles Robertson, London-based global chief economist at Renaissance Capital. In a world where statements are transmitted around the world instantly, African governments have also seen that their threats can give them leverage. First Quantum tumbled 12% on Tuesday and did not fully recover even after the company refuted the tax assessment on Wednesday.

Acacia lost 47% of its value in 2017 and another 26% so far in 2018, as its dispute with Tanzania drags on.

The share prices of Glencore and Randgold Resources, which both mine in the Congo, have been relatively more resilient despite the uncertainty there. Still, CEOs Ivan Glasenberg and Mark Bristow flew to Kinshasa in March with other mining executives to negotiate directly with President Joseph Kabila, a sign that the balance of power may be shifting from foreign investor to African government.

"The governments don’t care if they’re discouraging foreign investment in the future," Hillcoat said. "This is an opportunity right now to boost revenues."