Tanzania’s government has struck a deal with Barrick Gold, following a dispute that saw the company’s African subsidiary taxed a jaw-dropping $190 billion in revised taxes, interests, and fines.
The Toronto-based company said it will pay the government $300 million as part of the deal, give the government a 16% stake in its mines, and will equally split “economic benefits” from the mining operations. Barrick owns 63.9% equity interest in Acacia Mining, a London-listed company that is the east African nation’s largest gold miner.
As part of the agreement, Barrick said the Tanzanian government will participate in decisions related to operations, investment, planning, procurement, and marketing. As part of the proposal, which is subject to review by Acacia board members and shareholders, the company will also build the local capacity at all levels of the business, and maximize employment of Tanzanians in all of its three mines. Barrick chairman John Thornton said all this was to ensure “Acacia’s operations generate sustainable benefits and mutual prosperity for the people of Tanzania.”
The deal has already raised issues within Acacia, which said that “no formal proposal” has been sent to them, and continues to seek “further clarification” on the matter. Acacia also reportedly said that it couldn’t pay the $300 million settlement fee.
Tanzania’s populist-leaning president, John Magufuli, has been leading an effort to tackle corruption, squeeze mining companies for higher revenues and royalties, and to ensure that processing takes place within the country. He’s also been pushing for more Tanzanians to have jobs within these firms. In March, Tanzania banned the export of unprocessed minerals as part of this move.
In July, the government slapped Acacia with a $190 billion fine for allegedly operating illegally in the country and for failing to fully disclose its earnings in almost two decades. In August, the government seized $15 million worth of diamonds that were being exported to Belgium by Williamson Diamonds, a local company which is majorly owned by British firm Petra.
Impacted by the ban on gold and copper exports, Acacia says it has cut spending on its operations in Tanzania. Its net earnings for the three months ending Sept. 2017 were also down. Despite the uncertainties, Acacia’s parent company Barrick has continued to insist that the new deal wouldn’t jeopardize any of the operations.