Friday, July 28, 2017

Govt, Barrick negotiations to commence next week


By By The Citizen Reporter @TheCitizenTZ

Dar es Salaam. Barrick Gold Corporation, the biggest shareholder of Acacia Mining, will next week start negotiations with the government of Tanzania to resolve a tax dispute and a ban on exports of metallic mineral concentrates.

The company hinted in its second quarter results released on Wednesday this week that direct negotiations would start in the coming week to seek a resolution in the best interests of all parties - the government of Tanzania, Barrick and Acacia.

The company’s statement did not specify the exact date the negotiations would start, but highlighted that any potential resolution arising from these negotiations will be subject to approval by Acacia.

“Barrick is doing so in its capacity as Acacia’s largest shareholder. Acacia is not participating directly in the discussions at this stage…. However, it intends to work with Barrick as necessary to support the process,” it stated.

Barrick, which holds a 63.9 per cent equity interest in Acacia Mining, will sit at the negotiating table in the place of its subsidiary, which the government slapped with $190 billion tax bill on Monday. The government has said it does not recognise Acacia as it is not registered in Tanzania and officials were not immediately available to confirm the matter as efforts to reach them by phone did not bear any fruit. When reached for comment, State House spokesperson Gerson Msigwa asked The Citizen to check with the ministry of Energy and Minerals, but the deputy minister, Dr Medard Kalemani, neither did he pick any calls nor respond to text messages.

The minister of Constitutional and Legal Affairs, Prof Palamagamba Kabudi, did not pick any calls from The Citizen either.

In March this year, President John Magufuli announced a temporary ban on exports of metallic mineral concentrates and immediately formed two committees, which recommended a permanent ban on the same after accusing Acacia of illegally operating in the country and evading tax.

Barrick chairman John Thornton flew to Tanzania and met President Magufuli in mid-June and they agreed to engage in negotiations to resolve the row.

However, last Friday, President Magufuli threatened to close down gold mines in the country if mining companies delayed talks with his government to resolve the matter.

Barrick performance

Barrick said it continues monitoring the situation and should Acacia revise its full-year outlook, it will evaluate the impact. Any effect will depend on the duration of the concentrates export ban, it said.

Acacia operations impacted by the current ban on concentrate exports (Bulyanhulu and Buzwagi) account for approximately six per cent of the company’s 2017 gold production guidance. In total, Acacia accounts for about 10 per cent of Barrick’s 2017 gold production guidance.

The world’s largest gold miner by production reported better-than-expected quarterly earnings on Wednesday as its mining costs fell.

The company reported adjusted net earnings of $261 million or 22 cents a share in three months ending June up from $158 million or 14 cents a share in the same period last year on the back of lower mining costs and higher gold and copper sales.

That beat the 18 cents a share that analysts had expected, on average, according to Thomson Reuters.

With mines in Nevada, Australia, South America and Tanzania, Barrick produced 1.43 million ounces of gold in the quarter, up from 1.34 million a year ago, at an all-in sustaining cost of $710 an ounce compared to $782 per ounce last June quarter.