Barrick Gold Corp is proposing a Framework Agreement with the Government
of Tanzania that seeks to have mining companies under no obligation to
establish gold refining or concentrate smelting facilities in the
country. PHOTO | FILE | NATION MEDIA GROUP
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.
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.
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