1 August 2017

Tanzania: Searchlight Cast On Barrick ...as the Government Seeks Fair Share of Mining Sector Revenues

Photo: State House
Minister for Justice and Constitutional Affairs, Professor Palamagamba Kabudi, welcomes Barrick Gold Corporation negotiations team members to the State House in Dar es Salaam.

FINALLY, the special team formed by President John Magufuli is down to business as it started, yesterday, discussions with officials from Barrick Gold, the parent company of Acacia Mining, on its operations in Tanzania as the government seeks to reap its fair share of proceeds from the lucrative mining industry.

This comes after two presidential committees exposed anomalies in declarations of the quantity and value of copper concentrates produced by the company.

The Minister for Justice and Constitutional Affairs, Prof Palamagamba Kabudi, will lead the Tanzanian team while Mr Richard Williams, the Chief Operating Officer for Barrick Gold, is leading the team from the miner.

Speaking shortly before the discussions, Prof Kabudi said his team was well prepared to represent Tanzania's interests in the negotiations.

At the same occasion, Mr Williams welcomed the negotiations, stating that his company had positively responded to issues raised by the government of Tanzania, expressing optimism that the engagement would create a win-win situation.

Prof Kabudi is on record as stat ing that the government would embark on amending its mining, gas and tax laws to ensure the nation benefited more from its natural resources.

The findings of the two committees showed that the miner had 10 times more gold in containers prepared for export than it declared, denying billions of shillings in revenues.

Just recently, the Tanzania Revenue Authority (TRA) slapped the company with a bill totaling 190bn US Dollars (over 400trl/-) for unpaid taxes, penalties and accrued interests during the past 17 years from its Bulyanhulu and Buzwagi gold mines.

The TRA claims a total of approximately 40bn US dollars (about 88trl/-) for alleged unpaid taxes and approximately 150bn US dollars (about 330trl/-) on penalties and interest owed.

And, at the latest session of the National Assembly in Dodoma, the august House endorsed two legislations aimed at making Tanzania earn its fair share from the vast natural resources that the country is endowed with.

Barrick Gold is however on record for disputing the assessments issued in respect of allegations of under-declared export revenue following findings of the First Presidential Committee made public on May 24, and the Second Presidential Committee released on June 12, this year.

Shortly thereafter, the Chairman of Barrick Gold, Mr John Thornton, jetted into the country and held a meeting with President Magufuli in which he agreed to hold discussions to resolve the row.

Barrick Gold holds 63.9 per cent equity interest in Acacia Mining, which is a publicly traded company listed on the London Stock Exchange. Barrick subsidiary Acacia Mining has three mines in Tanzania, on two of which, Buzwagi and Bulyanhulu, an export ban for concentrates of gold and copper ore was slapped in March, this year.

Acacia has refuted the findings and re-iterates that it has fully declared all revenues "and is still yet to receive copies of the reports issued by either of the presidential committees."

Both subsidiaries, BGML and PML, have already referred these allegations to international arbitration. Shares in the company, at the London stock market are declining and according to Financial Times, the mining company dropped another 10 per cent on Monday after a series of analyst downgrades.

Acacia Mining owns and operates Tanzania's three major mines -- Bulyanhulu, Buzwagi and North Mara. Tanzania is Africa's third-largest gold producer after South Africa, Ghana and Mali.

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