A deal signed last year between Canadian mining company Barrick and the Tanzanian government could unravel if its implementation is delayed any further.
This was the indicting conclusion in a report by Toronto-based DaMina Advisors, published on January 16.
The report noted that the October 2019 deal on a new profits-sharing structure for Barrick’s gold mining operations in Tanzania remains unratified.
“The way things stand, Barrick may eventually have no option but to write off its multibillion-dollar assets in Tanzania if the deal is not ratified soon,” the report says.
In reaction, Tanzanian authorities said they were contemplating a revision of their agreement with Barrick, as doubts emerged over its implementation.
Attorney General Adelardus Kilangi told The EastAfrican on Thursday that the government will issue an official statement in the wake of a scathing new report by a Canadian frontier markets risks advisory firm.
Implementation of the deal was set to begin in the fourth quarter of last year after being submitted to AG’s office for review and legalisation.
But according to DaMina Advisors, there has been no progress whatsoever in implementation of any of the aspects of the agreement.
“Tanzania is seeking to re-open and negotiate afresh the agreement,” the report said, hinting that senior Tanzanian officials have continued to call it “defective and not nationalist enough” in various private discussions.
The Tanzania-Barrick agreement included the lifting of a gold and copper concentrates export ban imposed in Barrick’s predecessors Acacia Mining almost three years ago, in addition to removal of all obligations on Barrick to build gold refining or concentrate smelting facilities within Tanzania.
It was also agreed that the Tanzanian government would acquire a 16 per cent interest in each of Barrick’s three Tanzanian gold mines, and all economic benefits generated from the mines would be split 50-50 between Barrick and the government. Barrick would also make a $300 million payment as compensation for all past tax debts owed by predecessors Acacia to Tanzania. According to the deal, the payment would be effected in instalments beginning with a $100 million down payment, with a seven-year time scale given for the payment to be completed.
Various critics have said the deal still puts Tanzania on the losing side if its terms are implemented to the letter, particularly as the East African nation finalizes preparations to build its own minerals smelting plant and the country’s first gold refinery nears completion in Dodoma with trial operations set to start later this year.
Meanwhile, Barrick Gold Corp this week announced a further reduction of its North Mara mine workforce in Tanzania as part of continuing cost-cutting measures.
According to a letter from North Mara Mine general manager Luiz Coreia to all employees, seen by The EastAfrican, around 110 workers from six departments within the mine will be pruned.
“We understand this situation is not easy but a necessary step in protecting long term interests of our people, our business and other stakeholders,” Mr Coreia said.
The North Mara mine resumed operations in October last year following the lifting of government ban at its tailings storage facility in the wake of Barrick’s buyout of Acacia Mining Plc.
The biggest gold mining firm in Tanzania Barrick Gold fully acquired Acacia Mining after a Dar es Salaam court approved the takeover on September 13. This saw Barrick’s board rearranged and Acacia’s delisting and shares suspended from the London Stock Exchange.
Barrick also acquired all outstanding Acacia-issued shares giving it full control of Acacia’s Tanzanian market and operations, and effectively making Acacia a minor shareholder in Barrick Gold.
The buyout deal ended a five-year legal tussle for Barrick since handing over operations and management of its Buzwagi, Bulyanhulu and North Mara mines to Acacia.
By The Eastafrica