Magufuli sidelines Acacia, opens talks with Barrick

17Jun 2017
The Guardian Reporter
Dar es salaam
The Guardian
Magufuli sidelines Acacia, opens talks with Barrick
  • New details emerge about how Magufuli turned down previous requests to meet with mining executives until the presidential committees completed their work

THE government plans to launch direct talks with Barrick Gold Corporation, the world's largest gold miner, within two weeks-

President John Magufuli.

aimed at resolving an escalating dispute over allegations of large-scale tax evasion and a ban on exports of gold and copper concentrates, which has hit hard Barrick's subsidiary in Tanzania, Acacia Mining Plc.

However, the Tanzanian government and Canadian-based Barrick Gold Corp. have agreed to exclude Acacia Mining from the talks because of problems in its registration documents in Tanzania.

Mining giant Barrick, which has a 63.9 per cent stake in Acacia Mining, intervened in the dispute after Acacia was accused by the government of lacking a certificate of compliance from the Business Registration and Licensing Agency (BRELA).

Well-placed sources said the government was now assembling a team of legal experts, tax and mining officials to engage in talks with Barrick.

Minister of Justice and Constitutional Affairs Prof Palamagamba Kabudi is expected to be a key member of the government negotiation team with Barrick.

Prof Kabudi, a former dean of the University of Dar es Salaam's (UDSM) law faculty, also attended talks on Wednesday this week at State House in Dar es Salaam between President John Magufuli and Barrick Gold's executive chairman John Thornton.

Magufuli said at a joint media briefing with Thornton that his government would engage in talks with Barrick and not Acacia, which owns three gold mines in Tanzania - Bulyanhulu, Buzwagi and North Mara.

"In one or two weeks, we will begin full negotiations until we finish everything ... we should be able to come to a compromise," said Magufuli on Wednesday.

"We agreed that we will communicate with Barrick because we don't know the other company (Acacia) since it is not even registered with BRELA."

African Barrick Gold (ABG), which had a certificate of compliance in Tanzania, changed its name to Acacia Mining Plc in 2014, but Acacia is yet to complete its registration.

Magufuli said he was assured by Thornton that Barrick, as the majority shareholder of Acacia Mining, will ensure it honours its obligations after conclusion of the upcoming talks.

"We have agreed that from what will come out of that discussion, Barrick will be ready to pay through that understanding and that's why we decided to go for negotiations," he said.

Thornton described talks with President Magufuli as "very, very extensive and productive."

Barrick's high-powered advisors

"I've assured the president that we are very 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," he said.

"We will be sitting down soon with a team designated by the president and our own team to go through the detail of that and I feel very good about the progress today."

Thornton succeeded in having an audience with Magufuli in the company of Canada's High Commissioner to Tanzania Ian Myles after previous attempts by Barrick and Acacia officials to meet with the president failed.

Magufuli revealed that Ambassador Myles had previously sought audience with him before Wednesday's meeting, but he declined to meet with mining executives until the two presidential committees he appointed to investigate the mining sector had completed their work.

The first presidential committee was chaired by chief executive of the Geological Survey of Tanzania (GST) Prof Abdulkarim Mruma, and the second committee was led by an economics professor, Nehemiah Osoro.

The two teams produced scathing reports which allege that Acacia has evaded taxes, with an audit showing that the miner had 10 times more gold in shipping containers prepared for export than it declared. Acacia has denied the tax evasion accusations.

Kelvin Dushnisky, president of Barrick Gold Corporation, who is the company's No. 2 executive, flew to Dar es Salaam earlier this month and was joined by Acacia chief executive Brad Gordon but did not meet with Magufuli.

However, Thornton, Barrick's top executive, finally succeeded in meeting with Magufuli on Wednesday this week and both sides hailed their discussions as fruitful.

Thornton, a former Goldman Sachs executive who took over Barrick's leadership in April 2014, is credited with trying to create more accountability at the Toronto-based gold miner.

Barrick has a number of political heavyweights who sit on its international advisory board, which meets just once a year.

The role of the board, whose members include former prime ministers and defence officials, is to provide advice on geopolitical and other strategic issues that affect Barrick's business.

Barrick's advisory board is chaired by Brian Mulroney, a former prime minister of Canada. Other members are José María Aznar (ex-Spain PM), John Baird (Canada's former foreign affairs minister), William Cohen (former US defence secretary), Newt Gingrich (former Speaker of the US House of Representatives) and Karl-Theodor zu Guttenberg (Germany's former defence minister).

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