ACACIA Mining's Board of Directors in London is reportedly preoccupied with a drive to assure its shareholders that the company's mining operations in Tanzania are stable and promise more prosperity.
Documents seen by this paper show that the message put across repeatedly in Acacia Mining reports are that the company's reserves in Tanzanian mines are still a long way from exhaustion, and that the management has managed to ensure continued operations and production.
While good governance and good relations have been significant to continued profitability of the Tanzanian operations, the Acacia Board commended effective cost management that had made it possible for Acacia to thrive.
"To assure the shareholders of effective protection of their interests, the board has ignored the interventions by Barrick Gold Corporation, which is seeking to resolve the discord triggered by Acacia's disrespect of Tanzanian laws, policies and authorities, through negotiations, adding: "As the government was contemplating to end the negotiations, the merger of Barrick and Randgold brought in a new impetus to proceed and settle the Acacia discord," says a mining expert familiar with the negotiation process.
It is time the basic facts are wisely examined.
The first is whether all is well with Acacia operations in Tanzania. Apparently the Acacia board does not disclose the true picture of the Tanzanian operations.
Costs are running high and may soon become unsustainable. Acacia has accumulated very high tax bills and some through court judgments which have already been pronounced and are due for enforcement any time the negotiations with Barrick/ Randgold run aground.
Over the past two years, some of the profitable operations had to be placed under maintenance.
The board does not disclose the real cost of restarting the Bulyanhulu mine. The North Mara mine is under imminent closure for serious violations of environmental laws.
Reports of massive pollution of the environment and the poisoning of the adjoining communities are pushing the regulatory authorities to close the mine.
Environmental rectification requirements are threatening to impose debilitating costs if Acacia is to survive in Tanzania. The combined effect of regulatory liabilities have greatly diluted if not altogether wiped the value of the Acacia operations.
While Barrick had negotiated accommodative arrangements to rescue Acacia interests, the Acacia Board is said to be very busy campaigning against the Government of Tanzania and portray it as a demon that should not be tolerated in a civilised world. What it spells is the irreparable breakdown of the relations.
The Government of Tanzania is understood to have made it very clear that there will be no discussions with Acacia.
The Acacia Board is insensitively making efforts to gain access to the Government, presumably to demonstrate how wrongly the Government is handling the discord.
This is wishful attempt, says an expert, adding the Government won't allow that. "Clearly what Acacia is doing and contrary to expectations, is to harden the resolve by the Government to protect the best interests of the people of Tanzania against Acacia's greedy and disrespect to the nation which owns the resources," says another industrial expert.
The question is whether Acacia can win and have its way. Barrick has done all that can be done and together with Randgold, they are on the brink of rescuing the Tanzanian operations.
The government has given Barrick time to sort out any impediments to the closure of the negotiations, before enforcing the closure of the North Mara mine for environmental violations.
It is clearly a matter of time before Acacia is forced to cease operations in Tanzania. "Unfortunately, the truth which the Acacia Board of Directors has been desperately trying to hide is surfacing.
The Government maintains that there is incontestable evidence of very aggressive tax planning by Acacia that has led to massive tax evasions," says John Mbutta, a tax consultant.
There is a general consensus that the MDA relied upon by Acacia is a raw deal which Acacia should agree to rectify and bring fairness to the investor-host country relations.