Tanzania, gold giant Barrick start discussions over tax row

Monday July 31 2017

As Tanzania went into the negotiations, it

As Tanzania went into the negotiations, it insisted on meeting with Barrick officials, saying it does not recognise Acacia, as it is not registered in Tanzania. PHOTO COURTESY | THE CITIZEN 

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The Tanzanian government has started talks with Barrick Gold Corporation, the majority shareholder in Acacia Mining, to resolve a tax dispute and a ban on export of metallic mineral concentrates.

The government team is led by Constitutional and Legal Affairs Minister Prof Palamagamba Kabudi while Barrick’s team is led by its chief executive officer Richard Williams.

Speaking shortly before the talks began, Prof Kabudi said his team will push the country’s interests. Mr Williams said he was optimistic that the dispute will be resolved.

Barrick holds a 63.9 per cent equity interest in Acacia Mining.

The government slapped Acacia with $190 billion tax bill. As it went into the negotiations, the government insisted on meeting with Barrick officials, saying it does not recognise Acacia, as it is not registered in Tanzania.

In March this year, President John Magufuli announced a temporary ban on exports of metallic mineral concentrates and immediately formed two committees that later recommended a permanent ban on the same, accusing Acacia of illegally operating in the country and evading tax.

Barrick chairman John Thornton flew to Tanzania and met with President Magufuli mid-June and they agreed to engage in talks to resolve the dispute.

President Magufuli recently threatened to close down goldmines in the country if mining companies stalled in holding talks with his government to resolve the matter.

In response, Barrick said it would monitor the situation and should Acacia revise its full-year outlook, it would make a decision.

Acacia operations in Bulyanhulu and Buzwagi, which account for about six per cent of the company’s 2017 gold production, have been impacted by the current ban.

In total, Acacia accounts for about 10 per cent of Barrick’s 2017 gold production.

But the world’s largest goldminer by production reported better-than-expected quarterly earnings last Wednesday, as its mining costs fell.

The company reported adjusted net earnings of $261 million, or 22 cents a share, in the three months ending June, from $158 million, or 14 cents a share, in the same period last year, on the back of lower mining costs and higher gold and copper sales.

That beat the 18 cents a share that analysts had expected, on average, according to Thomson Reuters.

With mines in Nevada, Australia, South America and Tanzania, Barrick produced 1.43 million ounces of gold in the quarter, up from 1.34 million a year ago, at an all-in sustaining cost of $710 an ounce compared to $782 per ounce last June quarter.