Barrick Gold subsidiary loses prospecting licence in Tanzania

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Tanzania's president has lashed out at a Canadian-owned mining company, ordering the cancellation of its prospecting licence at a site where thousands of small-scale miners were facing the threat of forcible removal.

"How do you kick out more than 5,000 people in favour of just one investor?" President John Magufuli told senior officials this week, according to Tanzanian media reports. "This is unacceptable."

He ordered his vice-president to cancel a licence held by a local subsidiary of Toronto-based Barrick Gold Corp. and said the small-scale miners should be allowed to stay.

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The popular new president, an anti-corruption campaigner nicknamed "The Bulldozer" who was elected last year, has repeatedly criticized the foreign-owned mining companies in his East African country. He has accused them of "a lot of funny deals" to avoid taxes in Tanzania, the fourth-biggest gold producer in Africa.

Barrick's subsidiary, London-based Acacia Mining, is the biggest mining company in Tanzania, where it operates three major gold operations. It says it has invested $3-billion (U.S.) in the country.

Barrick has reportedly been seeking a buyer for its majority stake in Acacia.

Asked for comment on the revoking of its licence, an Acacia spokesman released only a terse, one-sentence response: "Acacia undertakes regular dialogue with the Mining Ministry and as such it is not appropriate to discuss specific issues publicly."

It is understood that Acacia did not plan to mine on the site and was in the process of selling its prospecting licence to a Tanzanian company. The cancellation of the licence could jeopardize the sale, although Acacia has ascribed zero carrying value to the licence.

In recent weeks, Mr. Magufuli has demanded that foreign-owned mining companies pay more taxes, build local smelters to process their minerals and list 30 per cent of their shares on a local stock exchange.

Acacia is one of the few foreign-owned miners with a local stock listing, although it doesn't meet the 30-per-cent requirement.

The smelter demand would not be commercially viable, according to the mining companies. The Tanzania Chamber of Minerals and Energy, which represents the industry, says the country's annual production of mixed concentrate is about 60,000 tonnes, far less than the 150,000 tonnes needed to justify a gold smelter.

Last March, a Tanzanian tax tribunal accused Acacia of engaging in a "sophisticated scheme of tax evasion." It complained that the company had failed to pay corporate tax in Tanzania from 2010 to 2013, while still paying more than $400-million in dividends to its shareholders.

The tribunal ordered Acacia to pay $41.25-million in taxes. The company appealed the ruling, but in October its appeal was dismissed by the Tanzanian Court of Appeal on procedural grounds. The company says it will file the appeal again.

The latest dispute is focused on a site in the Shinyanga region in northwestern Tanzania, where a government official had recently ordered the eviction of thousands of small-scale miners to make way for a bigger investor. The miners were given 14 days to vacate the site. They protested, calling the order "very unfair" and pointing out that they had been working at the site for more than 20 years.

President Magufuli reversed the eviction order. "They should stay put," he said, according to a report in The Citizen, a Tanzanian newspaper.

Another Tanzanian newspaper, The Guardian, quoted him as saying that government officials were illegally backdating the licences given to big investors to show that they had obtained their licences before the small miners arrived. This would "no longer be tolerated," he said.