A Tanzania business group has opposed a new U.S. law labeling all gold produced in countries neighbouring the conflict-hit Democratic Republic of Congo (DRC) as conflict mineral.

The Tanzania Chamber of Minerals and Energy (TCME) said the Dodd-Frank legislation aimed at cutting funds to armed rebels in DRC would jeopardise the country's gold industry, the fourth biggest by production in Africa.

The value of its gold exports rose by 19.3 percent in 2010 to $1.46 billion, a third of total foreign exchange earnings.

We have written to the US Security and Exchange Commission (SEC) to explain how this legislation will affect Tanzania's economy, TCME chairman Ami Mpungwe told Reuters by telephone from Australia.

Under the U.S. proposal, companies reveal annually whether they are sourcing tantalum, tin, gold and tungsten from the war-torn region, disclosing the source of the conflict mineral if that mineral is needed to make the product.

In a February 25 submission to the SEC seen by Reuters, Mpungwe said Tanzanian gold is not financing the conflict in the DRC, justifying amendments to the legislation.

He said Tanzania stood to lose the most from the new rules as it produced 44 tonnes of gold in 2010, almost two thirds of the total produced from the region and 1.7 percent of global gold production.

Mining firms see a possible 10 percent reduction in demand for gold from the country as a result of the Dodd-Frank legislation and a loss of more than 2,000 jobs in the sector.

Gold hovered at near record highs on Thursday, after rising by 10 percent in the six weeks since the unrest in north Africa erupted, and hit a record $1,440.10 an ounce on Wednesday.

Tanzanian Deputy Minister for Energy and Minerals, Adam Kighoma Ali Malima, said the U.S. legislation would have serious ramifications for the country's economy.

We are already burdened by harbouring refugees for 15 years ... It's unfair, he said.

TCME said Tanzania's annual gold export earnings could fall by $75 million and lead to a reduction of around $200 million in foreign direct investment (FDI) due to an expected reluctance to develop new mining projects.