African Barrick Gold (ABG) will spend $23 million over a two-year period in closing a key Tanzanian mine after its operations were stopped following declining production.

The London Stock Exchange-listed firm, which is also cross-listed on the Dar es Salaam bourse, said that as a result of closing its Tulawaka gold mine in the Kagera region of Tanzania, it will have to declare some of its employees redundant, while others will be redeployed to other sites.

According to disclosures contained in its latest annual report, the mining firm had about 5,668 employees with 5,230 in operations, 80 in exploration and 358 in administration for the year ended December 2012.

ABG has said that activities to close down the entire mine began after the operations were suspended in the first three months of this year but that it was still too early to give an estimate of the timeline for the closure.

“We ceased mining activities at Tulawaka in the first quarter of this year and have now commenced closure activities. We are still in discussions with the government regarding the closure, which will dictate the ultimate time scale,” said ABG in response to inquiries by The EastAfrican.

Even though ABG did not disclose how many employees were working in each of its mines at the end of last year, 87 per cent of those who work in the Tulawaka gold mine are from Tanzania.

“We are currently working through the final plans to assess those staff required to execute the closure of the mine and those for whom opportunities are available elsewhere. There will be redundancies following the appropriate consultation period,” said ABG.

The mine, which is an open pit gold mine with underground operations, began production in June 2005. The mine’s revenues dropped to $75.458 million for the period ended December 2012 from $131.435 million in 2011.

Last year its North Mara mine was the only one in Tanzania which realised increased revenues of $310.549 million, from $272.026 million as at the end of December 2011.

Revenues from the Bulyanhulu and Buzwagi mines dropped to $393.347 million and $259.954 million respectively as at the end of December 2012 from $429.528 million and $317.036 million as at the end of December the previous year.

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The disclosures to close down the Tulawaka mine come at a time when AngloGold Ashanti, which is listed on the Johannesburg, New York, Ghana and Australian stock exchanges, disclosed plans to invest over Tsh478.6 billion ($300 million) in its Geita Gold Mine over an eight-year period.

The mining company will use the money for the acquisition of heavy duty trucks for its operations. The firms has an open cast mine with three pits and currently employs 3,541 people directly and indirectly and a further 155 casuals and apprentices.

Mining exports are important to Tanzania; according to the central bank’s latest monthly economic review for the period ended March this year, gold exports accounted for half of the country’s total non-traditional exports. These non-traditional exports include diamonds, manufactured goods, horticulture, edible vegetables, fish and fish products.

The Bank of Tanzania said that the value of non-traditional exports amounted to $4.182 billion for the period ended February 2013, compared with $3.824 billion for the period ended February 2012 and that with the exception of gold, all other non-traditional exports increased.

Greg Hawkins, ABG’s chief executive, in disclosures contained in the firm’s latest annual report, said that the Tulawaka processing plant operated on batch milling due to the lack of sufficient ore to run it full time, which was a consequence of relying on underground material.

He said that ABG had successfully extended the life of the Tulawaka operation in the past three years, but as a part of an operational review, the company had taken the decision not to further extend its operations on the mine.

“We are currently starting to implement our closure plan for the operation and will engage with our employees as we move through this process. As a result of this and in combination with the downward revision of reserves, we have incurred a non-cash impairment charge at the mine of $44.5 million for 2012,” said Mr Hawkins.

Additional reporting by Rosemary Mirondo