Skip to main content

Barrick Gold’s incoming chief executive said he wants to pull together Tanzania’s mining industry to tackle a “desperate” tax dispute that has snared several companies, including the firm’s Acacia Mining unit.

In an increasingly acrimonious conflict that has lasted almost two years, the government has torn up mining contracts, hiked taxes and royalties, and banned raw minerals exports.

President John Magufuli, nicknamed “The Bulldozer,” swept to power in 2015 pledging to secure a bigger share of resource wealth and cut corruption. Acacia was later handed a $190 billion tax bill - about four times the country’s gross domestic product - for underreporting output.

Story continues below advertisement

The miner, 63.9 percent owned by Barrick, now faces dozens of criminal charges, from tax evasion to money laundering, with three employees arrested on related accusations

Randgold founder Mark Bristow, Barrick’s new CEO after its $6.1 billion acquisition of Randgold closes on Jan. 1, says fixing Barrick’s mounting problem in Tanzania could require a collective strategy that has not been used there before.

“Tanzania has got a broader (mining) industry and the importance of the industry itself getting together with government is not a bad idea,” Bristow told Reuters in an interview earlier this month.

While there is as yet no agreement to coordinate, “I don’t think it’s a bad place to start,” he said.

Mining accounted for 4.8 percent of Tanzania’s GDP in 2016, the last year for which figures are available. Acacia dominates the industry, followed by AngloGold Ashanti, Petra Diamonds and Shanta Gold.

AngloGold said it would consider allying with Acacia on the issue. A source at another mining company, who did not want to speak publicly, said it may be challenging to unite Tanzania’s mining industry, which may “not want to inherit” Acacia’s issues.

The collective approach is not assured to succeed.

Story continues below advertisement

A new code in the Democratic Republic of Congo, which scrapped a stability agreement while hiking royalties and taxes, was enacted despite vigorous opposition from miners led by Randgold and Glencore.

But Bristow, who says he plans to intervene in Tanzania before the takeover closes, is confident he can break the impasse.

“Barrick is concerned about the situation in country at the moment. It’s desperate,” he said.

Executive Chairman John Thornton, who last October struck a framework deal with the government that is still not enacted, said Bristow has “great standing” in Tanzania.

Under the October deal, Acacia was to pay the government $300 million, give it 16 percent ownership and split the economic benefits of its mines.

Acacia, which has lost more than two-thirds of its value since early 2017, was blindsided by the deal, a source said. The biggest hurdle to its enactment is disagreement over the $300 million pay-out schedule and whether it settles the long-standing tax dispute, the source said.

Story continues below advertisement

One of Barrick’s two lead negotiators, special envoy to Tanzania and former chief operating officer Richard Williams, recently left the company.

Barrick’s head of strategy Kevin Thomson will now work on the matter with Barrick’s new Africa and Middle East COO Willem Jacobs, who will take up Williams’ responsibilities.

Jacobs, formerly Randgold’s head of Central and East African operations, ran talks for the miner in Congo.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies