Tanzania: Acacia Surrenders to Government Pressure On Tax Payment

Photo: Daily News
Acacia Mining Plc.

ACACIA'S recent request for suspension of hearing of the long-standing dispute between the Tanzanian government and its two subsidiaries over tax payments signifies submission.

The Office of the Solicitor General said in a statement in Dar es Salaam yesterday that on July 19, 2019, Acacia Mining plc, which is listed on the London stock market, sought for stay of hearing of the July 22, 2019 scheduled dispute before the London Court of International Arbitration (LCIA).

The statement said Tanzanian government through the state attorneys, under the Solicitor General, was prepared to defend her case against Pangea Minerals Limited and Bulyanhulu Gold Mining Limited. In March 2017, the government banned the export of mineral concentrates, pressing for value addition and transparency in the value chain in the country's mining sector.

Tanzania Revenue Authority (TRA) seized 277 containers of mineral concentrates belonging to Pangea Minerals Limited and Bulyanhulu Gold Mining Limited over charges of fraudulent transactions.

In response to the government's seizure of the containers, Pangea Minerals Limited and Bulyanhulu Gold Mining Limited filed a petition opposing the ban on mineral exports.

The statement indicates that in July, 2017, Acacia filed the tax dispute at the Tax Revenue Appeals Board (TRAB) and at the LCIA, complaining that the Tanzanian government had breached the Mining Contracts (MDAs).

However, things did not go well for Acacia as TRAB dismissed the tax dispute on February 22, 2019, agreeing with the government's argument that the ban was valid in accordance with the Tanzania Tax Laws.

Following the TRAB decision, the mining firm remained with one way to resolve the dispute through the International Court in the UK where the case was strongly opposed by state advocates under the Solicitor General.

But, before the hearing started on July 22, 2019, Acacia lawyers informed the Tanzanian government of the intention to suspend the hearing to allow Barrick Gold Corporation to complete the ongoing negotiations with Tanzania.

Through the statement by Acacia's Chief Executive Officer Peter Geleta on July 19, 2019, the company requested for the stay to allow Barrick to complete the sale of all Acacia shares owned by minority shareholders.

"The statement of Mr Geleta clearly confirms that Acacia was not able to win the case and that is why they agreed with Barrick company to buy it after a long-running dispute," the Solicitor General said.

Mr Geleta's message was directed to Acacia employees, requesting them to remain calm and wait for the conclusion of negotiations between Barrick and Tanzania.

It is stated that Acacia's Chief Executive Officer has made it clear that it will provide relief for the company's current situation with its employees and completely end the tax dispute that existed.

Acacia had once made the statement that they were not aware of the ongoing negotiations between Barrick Company and Tanzania. But, Acacia's acceptance of the purchase and consenting to Barrick to continue negotiations with Tanzania prove that Acacia's claims against the Tanzanian government were unfounded.

"Acacia's request for suspension of the hearing of the case in court is one of the proofs that the procedure used by Tanzania to deal with corruption in the mining industry in the country was beneficial to the nation," the solicitor general said.

The completion of sale of shares allows the Tanzania to reach an agreement with Barrick company, heralding new era in the country's mining sector.

The move, according to the statement, will essentially enable Tanzania, which non-shareholder in the MDA Agreements to become one of the shareholders of the company to be established through a joint venture.

Additionally, the initiative will enable the government to effectively manage the mining profits in the country.

See What Everyone is Watching

More From: Daily News

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.