By Beatrice Materu, DAR ES SALAAM Tanzania
A deal signed last year
between Canadian mining company Barrick and the Tanzanian government could
unravel if its implementation is delayed any further. This was the indicting
conclusion in a report by Toronto-based DaMina Advisors, published on January
16.
Barrick Gold took over gold mines previously owned by Acacia Mining after a buyout deal. |
The
report noted that the October 2019 deal on a new profits-sharing structure for
Barrick’s gold mining operations in Tanzania remains unratified.
“The way
things stand, Barrick may eventually have no option but to write off its
multibillion-dollar assets in Tanzania if the deal is not ratified soon,” the
report says.
In
reaction, Tanzanian authorities said they were contemplating a revision of
their agreement with Barrick, as doubts emerged over its implementation.
Attorney
General Adelardus Kilangi told The EastAfrican on Thursday
that the government will issue an official statement in the wake of a scathing
new report by a Canadian frontier markets risks advisory firm.
Implementation
of the deal was set to begin in the fourth quarter of last year after being
submitted to AG's office for review and legalisation. But according to DaMina
Advisors, there has been no progress whatsoever in implementation of any of the
aspects of the agreement.
“Tanzania
is seeking to re-open and negotiate afresh the agreement,” the report said,
hinting that senior Tanzanian officials have continued to call it “defective
and not nationalist enough” in various private discussions.
The
Tanzania-Barrick agreement included the lifting of a gold and copper
concentrates export ban imposed in Barrick’s predecessors Acacia Mining almost
three years ago, in addition to removal of all obligations on Barrick to build
gold refining or concentrate smelting facilities within Tanzania.
It was
also agreed that the Tanzanian government would acquire a 16 per cent interest
in each of Barrick’s three Tanzanian gold mines, and all economic benefits
generated from the mines would be split 50-50 between Barrick and the
government.
Barrick
would also make a $300 million payment as compensation for all past tax debts
owed by predecessors Acacia to Tanzania. According to the deal, the payment
would be effected in instalments beginning with a $100 million down payment,
with a seven-year time scale given for the payment to be completed.
Various
critics have said the deal still puts Tanzania on the losing side if its terms
are implemented to the letter, particularly as the East African nation
finalizes preparations to build its own minerals smelting plant and the
country’s first gold refinery nears completion in Dodoma with trial operations
set to start later this year.
Meanwhile,
Barrick Gold Corp this week announced a further reduction of its North Mara
mine workforce in Tanzania as part of continuing cost-cutting measures.
According
to a letter from North Mara Mine general manager Luiz Coreia to all employees,
seen by The EastAfrican, around 110 workers from six departments
within the mine will be pruned.
“We
understand this situation is not easy but a necessary step in protecting long
term interests of our people, our business and other stakeholders,” Mr Coreia
said.
The North
Mara mine resumed operations in October last year following the lifting of
government ban at its tailings storage facility in the wake of Barrick’s buyout
of Acacia Mining Plc.
The
biggest gold mining firm in Tanzania Barrick Gold fully acquired Acacia Mining
after a Dar es Salaam court approved the takeover on September 13. This saw
Barrick’s board rearranged and Acacia’s delisting and shares suspended from the
London Stock Exchange.
Barrick
also acquired all outstanding Acacia-issued shares giving it full control of
Acacia’s Tanzanian market and operations, and effectively making Acacia a minor
shareholder in Barrick Gold.
The
buyout deal ended a five-year legal tussle for Barrick since handing over
operations and management of its Buzwagi, Bulyanhulu and North Mara mines to
Acacia.
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