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Barrick's Tanzanian project tests ethical mining policies Add to ...

Some activists claim that the mine’s pollution has caused the deaths of dozens of people and hundreds of farm animals. Activists have circulated photos and videos of two villagers with gruesome skin diseases, blaming their illnesses on the company. These allegations seem to be false. The spill from the storage ponds into a small river in 2009 involved only acidic water, which damaged the local wetlands. Barrick has provided convincing testimony from medical experts that the skin conditions of the two villagers were chronic or genetic disorders that could not possibly have been caused by environmental factors—especially since the two villagers live far upstream from the mine. “There is no doubt that neither of these conditions is the result of contaminated water,” a South African dermatologist said in the testimony.

Environmental issues do remain. By August, more than two years after the spill, the company was still working to satisfy government environmental orders to safeguard and manage the site. Once that is accomplished, Barrick can apply for crucial permits for water discharges at the mine. Norwegian scientists, who sampled the soil and water around North Mara in 2009 on behalf of church groups, have reported elevated levels of arsenic near the site, but Barrick has disputed their research.

Barrick tried to distance itself from its North Mara headache with the move last year to spin off its Tanzanian mines into African Barrick Gold. Nevertheless, it sees expansion in the future. Greg Hawkins, the CEO of African Barrick, says the company has invested $100 million in capital in North Mara this year, along with another $20 million in exploration around the mine, and it has no intention of giving up, despite costs that climbed close to $800 per ounce this year, far higher than the world average (all currency in U.S. dollars).

“We believe quite strongly in the asset,” he said in an interview. “We’ve stepped up the investment because we see a lot of prospectivity there. We could be on the ground there for a lot longer than just the 10 years that the reserve life tells us.”

Indeed, despite the high costs, profits are soaring. African Barrick’s net income from its four mines (all in Tanzania) leaped by 51% to reach $69.8 million in the second quarter of this year, up from $46.2 million a year earlier. That translates into about 6% of the parent company’s earnings from its 26 operating mines around the world.

Hawkins admits there is “frustration” and “venting of historical issues” in the villages around North Mara, but he is confident that the company and the government are improving the security situation. “We’re sticking to our long-term plan,” he says. “We’ve got a clear idea of where we’re heading. It’s a long-term asset for us, and for Tanzania. The mine is a key economic driver in the region and the country, and nobody wants to lose that.”

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Yet as gold prices rise and the mine becomes more valuable, the conflict intensifies. The massive piles of waste rock have become the only real source of income for the villagers, who have largely abandoned farming and have little hope of wage employment. And the rising price of gold has drawn a rush of newcomers from across East Africa.

Hundreds of villagers and migrants enter the mine illegally every day to scrounge for rock. They have borrowed an English word to describe themselves: “intruders.” The word has entered the Swahili language, with no negative connotation, as the name of a new occupation that can produce money and even wealth. For many of the hundreds of intruders who enter the mine illegally every day, this is a profitable business.

Nelson Charles, a 22-year-old intruder, was shot in the arm by the Tanzanian police when he fled the shooting on May 16. He has become a fugitive, hiding from the police for fear that they will arrest anyone who was injured that day. His injury has left him too weak to work. But until now, the life of an intruder has been rewarding.

At the age of 19, Charles was a high-school dropout in a nearby town. A farmer’s son, he had been unable to afford his school fees. Today, after working as an intruder for three years, he owns a motorcycle, a television, a DVD player and a $500 Nokia smartphone. He has spent thousands of dollars to buy a plot of land in his hometown, and he plans to build a house there for his family. Several of his friends from school have followed him to North Mara.

“My lifestyle has changed,” Charles says. “My friends all congratulate me. They say I made a wise decision.”

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