ESTABLISHMENT of a
joint venture mining firm, Twiga Minerals Corporation Limited, makes the
government, for the first time in the country's independence history,
to have legal secured interests and open a new era of productive
partnership in the mining industry.
This follows some
remarkable successful negotiations and subsequent signing of landmark
agreement between the government of the United Republic of Tanzania and
the Barrick Gold Corporation, the second-largest gold mining company in
the world, with its headquarters in Toronto, Ontario, Canada.
The negotiations
could not only lead to the formation of the mining firm, but also to
payments of 250bn/- as compensation paid by Barrick Corporation out of
300 US dollars the company agreed to pay to settle all outstanding tax
and other disputes.
Besides ending the
prolonged dispute, the deal signed by Barrick President and Chief
Executive Officer Mark Bristow and Tanzanian Minerals Minister Doto
Biteko in Dar es Salaam, sets a template for negotiations with other
firms.
Reports show that
the government is now renegotiating mining agreements with all existing
companies to get a minimum of 16 per cent stake in each large-scale
mine, in line with mining laws passed in 2017.
More importantly,
the resolution ensures that Tanzania gets more income from its natural
resources, one of the major policy objectives of President John Magufuli
since he assumed office. Minerals are a major source of foreign
exchange and make up the majority of exports from Tanzania.
However, the
signing of the agreement in question was not an easy task. Thanks to the
bold decision by Dr Magufuli, of working on his promises as per
implementation of the ruling Chama Cha Mapinduzi (CCM) 2015/2020
election manifesto.
After his
nomination on July 21st, 2015, as CCM's presidential candidate for the
2015 election, one of his priorities he marketed during the campaign was
the mineral sector. He promised to take actions to further promote the
Mining Industry and increase its contribution to Gross Domestic Product
(GDP).
The Head of State
also pledged to ensure his government protects natural resources for the
benefit of all Tanzanians. In order to have legal power over the
matter, the government, through the Attorney General (AG), moved for
amendments or enactments of laws to facilitate the process smoothly.
When dissolving the
11th Parliament in Dodoma on June 16th, 2020, Dr Magufuli pointed out
massive achievements obtained in the mineral sector, including the
control of the export and transportation of raw minerals outside the
country and enactments or amendments to laws regulating mining
activities.
Likewise, when
presentation of the 2020/20201 general budget, Minister for Finance and
Planning, Dr Philip Mpango, pointed out that the amendment of the laws
has facilitated negotiations between the government and all major mining
companies with the aim of acquiring 16 per cent of the State's shares.
It is the passing
by the National Assembly of the Natural Wealth and Resources (Permanent
Sovereignty) Act of 2017, which resulted in the establishment of Twiga
Minerals Company, which the government owns 16 per cent and Barrick
Company owns 84 per cent of the shares.
The government and
Canada's Barrick Gold Company jointly owned Twiga Minerals Corporation,
which has already been incorporated and registered by the Business
Registrations and Licensing Agency (BRELA).
Twiga Minerals
Limited headquartered in Mwanza, a port City on the shore of Lake
Victoria, in northern Tanzania, is to manage the Bulyanhulu, North Mara
and Buzwagi mines.
Foreign Affairs and
East African Cooperation Minister Professor Palamagamba Kabudi, who was
the Chairman of the Negotiating Committee of the government of
Tanzania, was quoted as saying that the talks between the government and
Barrick Gold successfully concluded the operation of Acacia Mining.
Barrick President
and Chief Executive Mark Bristow said the agreements introduced a new
era of productive partnership with the government of Tanzania and would
ensure that Tanzania and its people would share fully in the value
created by the mines they hosted.
"Twiga Minerals
represents a structure which allows the government and the people of
Tanzania to be involved in the decision-making of everything that we do
together," Bristow was quoted as saying.
According to him,
the agreements also marked the end of the long impasse between the
government of Tanzania and Acacia which had led, among other things, to
the closure of North Mara and the freezing of export concentrate from
the two other operations.
Barrick Gold
Corporation, the largest shareholder of Acacia Mining Limited's issued
shares, holding approximately 64 per cent, took over the management of
the mines after its buy-out of its minorities. Acacia had been operating
three gold mines in the country of Buzwagi, Bulyanhulu and North Mara.
Prior to the
negotiations, in August 2016, just a year after assuming the highest
office, Dr Magufuli announced a ban on the export of metallic mineral
concentrates. It was reported that some miners in Tanzania had been
sending heaps of earth containing metallic ore to Asia and Europe for
smelting.
However, in March
2017, the country's largest gold miner, London-listed Acacia Mining
Limited flouted the ban. The president subsequently ordered the seizure
of more than 277 of its containers at the port of Dar es Salaam.
The Head of State
then formed two teams to investigate the matter. The first team
investigated the contents of the containers, while the second one dealt
on the value concentrates exported since 1998 to 2017 for smelting.
Presented
"explosive" reports in May and June 2017 alleged Acacia had
under-declared the value of the ore, skewing the amount of tax it had to
pay.
The first probe
team under Prof Abdulkarim Mruma, the Head of the Geological Survey of
Tanzania, revealed that all minerals found in the 277 containers,
including gold, silver, sulfur, copper and strategic minerals were worth
between 829.4bn/ and 1.438trl/-.
Prof Mruma was
quoted as briefing the President that his team unearthed huge quantities
of gold concentrate in the mineral sand investigated at between 671
grammes per tonne and 2, 375 gram per tonne, an average of 1,400 grammes
per tonne.
This means that
there were 28kgs of gold in one container weighing 20 tonnes of mineral
sand. Reports also shows that an average of 1.4kg of gold per tonne of
mineral sand were identified in the containers, seven times as much as
reported by Tanzania Minerals Audit Agency(TMAA).
The second report,
concerning the economic impact of the mineral sands exports, which was
led by Prof Nehemiah Osoro, revealed that Acacia had under-declared
revenues and tax payments over a number of years, occasioning loss to
the government of over 380tri/-.
Prof Osoro
recommended for summoning and questioning of officials involved in the
shoddy mining agreements, through which the nation incurred huge losses
in government revenue.
Armed with the
findings, Dr Magufuli's government slapped the Acacia Company with a
mammoth tax bill of 190 billion US dollars, covering the 17 years it had
been operating in the country. Though Acacia denied any wrongdoing, its
parent company Canada-based Barrick Gold, opted for the talks.
Barrick Gold
Corporation Executive Chairman, Prof John Thornton, flew by his private
jet all the way from Canada to Dar es Salaam and held talks with
President Magufuli in the presence of Canada's High Commissioner to
Tanzania Ian Myles and the then Minister for Constitution and Legal
Affairs, Prof Kabudi.
Prof Thornton made
commitment at State House that the management of Barrick Gold
Corporation was willing and ready to hold talks with Tanzania based on
win-win situation, a win for Tanzania, a win for Barrick and their
subsidiary company - Acacia, to ensure the evaded tax is settled.
He is also on
record informing the media that after having extensive conversation with
the President, he felt optimistic that they will reach a resolution
that will benefit all parties involved.
President Magufuli
said apart from agreeing to pay the government dues, Prof Thornton also
agreed to cooperate with Tanzania in installing a smelting plant in the
country.
In October 2017,
Barrick offered to pay the Tanzanian government 300 million US dollars
to resolve outstanding tax claims and would share equally any economic
benefits from Acacia's operations in Tanzania with the government in
future.
Following the
successful negations, in January 2020, President Magufuli released for
sale to potential customers the 277 containers of mineral sand that had
been seized at the Dar es Salaam Port, immediately after the official
signing of nine agreements with Barrick Gold Corporation.
Such signing
concluded the talks that facilitated to the formation of joint venture
between Barrick Gold Company and the government of Tanzania, a firm that
will oversee the operations of mines formerly operated by the Canadian
mining company.
No comments :
Post a Comment