- Minister for Foreign Affairs and East African Cooperation, Prof Palamagamba Kabudi who said that its expected performance will serve as an example to other mining companies in the country. That was after finalizing consultations with Barrick Gold chief executive officer Mark Bristow in Dar es Salaam.
For those who have been following the legal intricacies and rather psychological parameters of the issue, this outcome is something that was to be expected. Despite that Barrick Gold as the main shareholder in the now defunct Acacia Mining held its fort in the hectic days of the gold concentrates seizure by the government and a multibillion shilling tax bill slapped on the company, it was gradually shifting position, or refocusing its strategies and negotiating options.
While the management of Acacia was insisting on optimal or say maximal realization of its rights as a foreign investment firm, the Canadian main shareholder was keen on arriving at a workable compromise as after all this isn’t Canada. One cannot conduct a giant mining venture on terms only acceptable to foreign shareholders of the mining company as Acacia appeared to believe, so Barrick moved in and purchased the other shares. It means the main shareholder paid off recalcitrant shareholders with a ‘robber mentality’ so that a new relationship can be built with the Tanzanian authorities.
The joint venture company still has to be properly unveiled and its working mechanisms and benefit sharing modalities, taxes and profit disposal strategies all laid out for others to believe that it is the real thing. But the usually ‘hawkish’ former top negotiator and lead adviser in the matter, now serving as foreign minister was totally convinced it shall work, and even be emulated by other firms. One thing is that it can serve as an example forstrategic minerals now being pursued by some key developed countries, even as joint ventures prove somewhat problematic in oil and gas, etc.
The Barrick CEO expressed relief that the dispute between the gold mining giant and the government is over and the company is now ready to work together with the government. He emphasized on the idea of a true partnership, where 50-50 stakeholding operates. That all the same will have to be carefully managed, so that the rights and responsibilities of either partner do not become a fetter to obtaining more investments, especially when it comes to revenue sharing.
There is reason to believe that the joint venture move is still work in progress especially as it relates to making the restructuring exercise accommodative of existing capital structures and obtaining more for further development in the sector. As in the past Barrick Gold wanted to sell its Africa stake to a Chinese bank and failed, the new moon ought to be celebrated with crossed fingers, so that it isn’t a false dawn in due course. Sustainability is the key to success, which means attracting more capital into the sector, not just an operating format for what is already on the ground, as that would mean gliding towards decay and dilapidation as new investments go elsewhere.