Tanzania: Barrick's Offer Would Alter Tanzania Protective Mining Law

Canadian miner Barrick Gold Corp, the majority owner of London-listed mining firm Acacia Mining Plc, is proposing a plan that could reverse some of the gains Tanzania is seeking in a deal with the embattled company.

Barrick's proposed Framework Agreement with the Government of Tanzania seeks to have mining companies under no obligation to establish gold refining or concentrate smelting facilities in the country.

"The Framework Agreement and the Amended and Restated MDAs [Mineral Development Agreements] provide that there is no obligation on the part of the TMCs [Tanzania mining companies] to establish beneficiation (including gold refining or concentrate smelting) facilities in Tanzania," it says.

MINERAL BUSINESS

Tanzania imposed an export ban on gold and copper concentrates in 2017 to curb smuggling and tax evasion.

And now, with President John Magufuli pushing for the construction of a smelter in the country to boost the benefits Tanzania gets from its natural resources, he has ordered Mining Minister Dotto Biteko and his team to urgently work on the plan.

Also Read

Five Sudanese protesters shot dead ahead of talks

Egypt, Jordan leaders hold talks over Israeli-Palestinian peace

Pompeo avoids ruling out run for president some day

Mr Biteko confirmed that the government had issued a licence for building the smelter.

"After intense discussions and presentations from investors, we granted two licences -- one for a refinery and one for smelting --so it won't take long before construction begins," he said at State House Dar es Salaam on Wednesday, when a Kenyan delegation returned some 34kg of gold intercepted at the airport in Nairobi while being smuggled out last year.

Some media have identified the two beneficiary companies as Chinese.

The minister said that the government had received more than 30 bids from mining firms.

But the firms that have shown interest in investing want assurance of availability of gold and copper concentrates for smelting.

Barrick, for example, wants unfettered rights to export minerals (including doré, an alloy of silver and gold, and concentrates) until refining (in the case of doré) and smelting (in the case of concentrates) are available in Tanzania. It further wants the government of Tanzania to provide assistance "so all required authorisations and/or waivers be granted to the TMCs so as to facilitate the export of doré and concentrates."

Acacia's Bulyanhulu and Buzwagi mines produce around 50,000 tonnes of gold/copper concentrate per year.

But observers say that lifting the export ban will leave the envisaged smelter with limited concentrates.

DEALS AND DISPUTES

Government spokesperson Dr Hassan Abbas, however told The EastAfrican that the discussions with Barrick on the proposals had not been finalised. He said the government's aim was to "cut all ties" with Acacia Mining and work with "only Barrick" on the implementation of the 2017 deal.

"Barrick has one task: To ensure Acacia will not be part of the final deal... then the negotiating teams will sit and discuss further," Mr Abbas added. "Under no circumstances can Acacia be a party to the agreement, or have any role in the operation or management of the Barrick mining subsidiaries in Tanzania. They have done massive damage."

Acacia Mining has been embroiled in a long-standing dispute with Tanzania over tax evasion, breach of environmental regulations and other issues.

In October 2017, Barrick, which holds a 63.9 per cent stake in Acacia, agreed to a $300 million payment to resolve the tax claims, set up a local operating firm in Tanzania, and share Acacia's economic benefits with the government on a 50-50 basis.

Acacia has three mines in northern Tanzania -- Bulyanhulu, Buzwagi and North Mara.

"Significant amounts of real value have been destroyed by this dispute and, in Barrick's view, this proposal will allow the business to focus on rebuilding its mining operations in partnership with their respective stakeholders," Barrick said in a statement.

Out of the 277 gold/copper concentrate containers the government seized in March 2017, 104 are owned by Bulyanhulu goldmine.

Tanzania cited false and incorrect export declaration by not including other minerals such as rhodium, iridium sulphur, iron, lithium, berullium and ytterbium being one of the reasons to deny the firms the exportation.

According to Acacia, the ban has resulted in unsold concentrates of approximately 186,000 ounces (5,270kg) of gold, 12.1 million pounds (5,480 tonnes) of copper and 159,000 ounces (4,500kg) of silver as of January this year (2019).

PAYMENT PLAN

In July 19, 2019 Barrick Gold released details on the payment plan. The government would be paid $300 million in instalments beginning with $100 million, and that it could take up to seven years to settle the full amount.

"There will be an initial upfront "payment" by way of assignment to the government of Tanzania of minerals contained in containers at Dar es Salaam port with a value of $100 million, such value to be determined pursuant to a protocol separately agreed between the parties."

According to the statement, payment will be made within a prescribed period with conditions such as the signing of the Framework Agreement, and the lifting of the export ban imposed on the Tanzania mining companies.

Tanzania upon agreement will get 16 per cent stake in Acacia Mining as part of the deal. Tanzania and Acacia Mining will co-run a new mining company that will be formed to replace Acacia Mining, with its headquarters in Mwanza, Tanzania, a city located at the heart of the gold zone.

Acacia said that alongside Barrick, they believe that a negotiated settlement of Acacia's disputes with the government is necessary.

"Barrick, the Company's majority shareholder, has been in discussions with the government in an effort to identify and document a solution to the Company's disputes which would include a lifting of the export ban and settlement of all other outstanding disputes," Acacia noted.

See What Everyone is Watching

More From: Citizen

Don't Miss

AllAfrica publishes around 600 reports a day from more than 150 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.