TANZANIA is on course to register the biggest coup in an economic war over its mineral resources after striking a deal with Barrick Gold Corp, to settle a tax and revenue sharing disputes over three gold mines in the country operated by its African subsidiary group, Acacia Mining.
After three months of painstaking negotiations, the Toronto-based company said it will pay the government 300 million US dollars (about 700bn/-) as part of the deal, give the government a 16 per cent stake in its mines, and will equally split "economic benefits" from the mining operations.
Barrick owns 63.9 per cent equity interest in Acacia Mining which is the country's largest gold miner. As part of the agreement, Barrick Gold Corp said the government will participate in decisions related to operations, investment, planning, procurement, and marketing.
A working group has also been formed to resolve "outstanding tax claims" against Acacia. The government had slapped Acacia Mining with a 190 billion US dollars tax invoice last July for unpaid taxes for two decades of operation, penalties and interest.
"We have developed a framework for a modern, 21st century partnership that should ensure Acacia's operations generate sustainable benefits and mutual prosperity for the people of Tanzania, as well as for the owners of Barrick and Acacia," Barrick Chairman John Thornton said in a statement.
"The currency of trust is transparency. We are very excited about this partnership as it creates the potential to build a very compelling business inside Tanzania and in this party of Africa," Prof Thornton said.
President John Magufuli said the deal enabled him to call Barrick Gold Corporation executives "brothers" because "they are here to stay" for benefit of both the investors and the Tanzanian government and its people. President Magufuli added that the framework agreement would serve as a model for other mining companies operating in the country.
In a rejoinder, Barrick Gold said on Friday that the proposed mining settlement it negotiated with Tanzania for its Acacia Mining unit was not under threat, even though Acacia said it could not immediately make a $300-million payment included in the deal.
Acacia's Chief Financial Officer Andrew Wray was quoted as saying the gold mining company did not have the ability to make a $300 million payment to the Tanzanian government to resolve a tax dispute.
The gold miner said in a separate statement it was waiting for further clarification on the agreement. Shares in beleaguered gold miner Acacia surged as much as 30 per cent after announcement of the deal on Thursday.
The stock jumped to 255.50p after Canadian mining group Barrick - which owns 64 per cent of Acacia - unveiled a breakthrough in talks. However it pared back some of the gains to close at 212p amid some confusion about the details of the agreement. Tanzania is Africa's largest gold producer after South Africa, Ghana and Mali.
The bullion dominate the country's mining sector and exports but its contribution to the economy has remained low.
The mining sector is dominated by gold, whose export value was $1.4 billion in the year that ended in October 2016, contributes less than four per cent to the Tanzania's gross domestic product (GDP).