Tanzania takes Round One as mining giant backs down

Thursday June 22 2017

The Acacia North Mara Gold Mining site. PHOTO | FILE

By Allan Olingo

Tanzania seems to have won the first round of its dispute with Acacia Mining after the company agreed to hold discussions with the government on the construction of a smelting plant.

But the two sides issued conflicting statements on the status of the repayments of under-declared exports, after a meeting between President John Magufuli and John Thornton, chairman of Canadian firm Barrick Gold Corp, which owns 63.9 per cent stake in Acacia Mining Plc.

President Magufuli’s office, in a statement, said that Mr Thornton had admitted to wrongdoing and agreed to send a team to discuss how to repay any losses the company may have occasioned the government.

“The negotiation will also touch on the compensation of losses incurred by Tanzania from the company’s operations in the country. Mr Thornton also agreed to co-operate with Tanzania to build a smelter in the country,” the statement said.

Acacia Mining insisted that no agreement has been reached on the metallic mineral concentrate controversy, disputing the government’s claim that it had agreed to pay the costs of undeclared minerals shipped out of the country.

“As the negotiations have yet to commence, no agreements have been reached, but it is our hope that these negotiations will seek a resolution that is in the best interests of all stakeholders,” Acacia said.


Positive progress

Neither side gave a timeframe for the negotiations although Mr Thornton said they would start soon.

During a conference call on Thursday, the firm’s chief executive officer Brad Gordon lauded the midweek discussions between Acacia and Tanzania noting that this was positive progress for the two sides, which have not had any face to face meeting since the ban on the export of unprocessed ore three months ago.

Acacia also said that its mining production of gold has been hit by the export ban but targets for the year remain unchanged.

“Of course, we have had impacts on productivity but we are guiding at this stage that we will be within the targets that we announced at the start of the year and that hasn’t changed,” Mr Gordon said.

Tanzania is pushing for the construction of a smelter local ly and has accused Acacia of tax evasion, operating without a license and under-declaring the contents of containers prepared for shipment.

Since the ban, Acacia’s market value has nearly halved to about $1.4 billion, in part because of the push to construct a smelter locally to make the country’s gold exports more valuable.

Barrick Gold, however, indicated that it was ready to hold talks with the government on an array of issues, including the ban on mineral concentrate exports.

“I am optimistic a resolution would be reached. I have also assured the president that we are interested in sitting down and reaching a resolution which is a win-win. A win for Tanzania, a win for Barrick and a win for our subsidiary company, Acacia,” Mr Thorton said, after the meeting.

The accusation followed an audit of Tanzania’s mineral exports over the past two decades that found mining companies failed to remit taxes of as much as $48.5 billion. Acacia has been accused of evading taxes, under-declaring gold exports, failing to report some metals and operating in the country without a certificate of registration.

Last month’s audit by a special taskforce formed by President Magufuli found it had 10 times more gold in containers prepared for export than it had declared and that the concentrate included a number of undeclared minerals, accusations it has denied.