Tanzania: What's in Store for Barrick, Tanzania Government Deal

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mining

Dar es Salaam — A cloud of uncertainty surrounds the apparent frame work agreement between the government and mining giant, Barrick Corporation, nearly three months after it was made public.

Silence has since followed Barrick's as well as the government's confirmation of the agreement to end a multi-billion shillings tax dispute, with neither of the two parties showing any progress on the ground.

Inquiries around the matter suggests unspecified fresh huddles may have delayed an anticipated public unveiling and signing of the deal that would allow full-fledged resumption of Barrick's mining activities in Tanzania.

Going by past experience, including the signing of the June 2019 Airtel-ATCL deal, it is unlikely that a seal on the agreement with Barrick would pass quietly, and indeed most analysts we spoke to said they expected it to be highly publicized.

As at now, other than the broadcast details of the agreement, the other only development is the October 2019 registration, in Tanzania, of Twiga Minerals Corporation to manage Bulyanhulu, North Mara and Buzwagi mines, formerly under Acacia which was wound up and shares assumed by Barrick as part of the agreement. Twiga Minerals Corporation will be jointly managed by Barrick and the government of Tanzania.

According to a statement issued by Barrick on October 20, its final agreement with the government was submitted to the Attorney General for review and legalization. Reports also quote Prof Palamagamba Kabudi who was the lead negotiator for Tanzania as saying that the legalization would be completed by mid-November.

Efforts by The Citizen to obtain comment from Prof Kabudi or the AG Adelardus Kilangi on the status of the agreement were futile as call to their phones went unanswered. But in a telephone interview yesterday, Prof Simon Msanjila, the Permanent Secretary of the Ministry of Minerals said talks were still ongoing. He did not, however, indicate the nature of the talks.

"There are still ongoing talks between the government and Barrick. We will share the information with the public when the negotiations come to an end," he told The Citizen in the interview.

Prof Msanjila revealed the ban on Barrick's mineral concentrate exports remains. He said the government had no intention to lift the ban in the near future even if the two sides reconciled their dissimilarities.

"Our focus now is to build mineral processing plants (smelters) to ensure the produced minerals are locally processed before being exported," the PS added.

According to Barrick, its agreement with the government included lifting of the ban on its mineral concentrate exports, a payment of $300 million (Sh690bn) "to settle all outstanding tax and other disputes" the sharing of future economic benefits from the mines on a 50/50 basis and the establishment of a "unique, Africa-focused international dispute resolution framework." This is in addition to the 16 per cent carried free interest by the government in the respective mining companies.

It thus remains unclear if, going by Prof Msanjila's insistence, the ban on the mineral concentrate exports, could have anything to do with the delay of unveiling the final agreement to the public. Questions also abound whether the pending criminal case facing ex-Barrick and Acacia top executives Deo Mwanyika and Asa Mwaipopo and other middle level managers in Tanzania courts are also in the mix of things.

Mr Mwanyika who was one of the Vice Presidents for Barrick Gold Corporation after serving the miner in several top positions locally and Mr Mwaipopo who was the last known CEO for Acacia in Tanzania have been in prison since October 2018 after they were charged with several counts of money laundering, tax evasion, forgery and abetting crime. Some of the charges are non bailable.

The figures in the case facing the duo ranged from $1.5 million (Sh3.45bn) to $752 million (Sh1.73 trillion). It is significant that Mwanyika and Mwaipopo are not among the suspects who have applied for plea-bargaining which has seen individuals facing serious criminal cases buy their way out of prison by paying billions of shillings to the Director of Public Prosecution (DPP).

Barrick Gold Corporation would be hoping to lay the ghost of the dispute as the New Year beckons even as it struggles to steady its rocked boat. Sources familiar with the company told The Citizen that the miner was also concerned a December 30, 2019 deadline to update World Bank's International Centre for Settlement of Investment Disputes (ICSID) in the case formerly filed by Acacia was nearing. The hearing of the case was put on hold to allow for the conclusion of the negotiations.

Resumption of underground mining at Bulyanhulu mine in 2020 could also be impacted should the mineral concentrate export ban remain unresolved. Currently, it is estimated that up to $300 million worth of gold is lying at the Dar es Salaam port in Barrick's withheld mineral concentrates stockpile. Thousands of jobs and businesses around the mine have been put at risk as the ban continues. Other sources intimate that Barrick itself was unsettled should authorities push for further inquiries on all its mining interests locally-post Acacia.

Additional Reporting John Namkwahe

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