Major issues on the table as govt, gold miner negotiate

Dar es Salaam. Eight major issues are likely to dominate the ongoing negotiations that seek to resolve a dispute between the government and Barrick Gold.

An analysis of the dispute shows that the negotiations between the government – which is represented by a team of experts led by the Constitution and Legal Affairs minister, Prof Palamagamba Kabudi – and Barrick Gold Corporation, will mostly centre around the findings of the two presidential probe committee reports into Acacia’s mining activities in the country for the past 17 years.

The findings of the two committees, one chaired by Prof Abdulkarim Mruma and another by Prof Nehemiah Osoro, which were released in May and June this year, respectively, indicated that Acacia Mining Plc, the subsidiary of Barrick has been telling the government the truth about revenue from its exports of metallic mineral concentrates.

Acacia denied the findings of both reports, saying its financial and mineral production disclosures were transparent and done in accordance with Tanzanian laws. Acacia then called for an independent probe of the issue.

Prof Mruma’s committee found out that mining companies were grossly under-declaring the amount of taxable minerals in the metallic and mineral concentrates.

It revealed that Acacia Mining – a subsidiary of Barrick Gold - declared the presence of gold, copper and silver in its metallic and mineral concentrates exports, but did not declare other precious metals in the consignments.

 According to Prof Mruma’s report, Acacia declared about 1.1 tonnes of gold in the containers, but investigations established that the shipment contained up to 15 tonnes.

Prof Osoro, who led the second presidential mining committee, looked into the historical, economic and legal aspects of the export of the metallic mineral concentrates.

Prof Osoro’s committee found out that the government has lost between Sh68.59 trillion and Sh108.46 trillion from unpaid mining taxes due to under declaration of exports of metallic mineral concentrates by Acacia Mining PLC for the last 17 years.

The veracity of the findings of Mruma’s and Osoro’s reports is a bone of contention between the two parties. It is most likely that during the negotiations, Barrick Gold would seek an independent review of the findings of the presidential probe committees.

Despite the fact that Acacia offered the support both committees needed during their probes, as the mining firm claimed in statements in the run up to the release of both reports, it was not given access to the findings of the reports to review and comment.

“The report and the findings of the committee have not been shared with Acacia and it is not clear to what extent they will be disclosed at the presentation this morning,” Acacia said in a press statement just before President John Magufuli received the first report on May 24.

The Toronto based gold mining o come up with facts to show the government why it thinks the $190 billion (about Sh425 trillion) in unpaid tax and penalties imposed on its two mining operations in the country is unrealistic as it had claimed.

Acacia’s Bulyanhulu Gold Mine Limited (BGML) and Pangea Minerals Limited (PML), the owners and operators of the Bulyanhulu and Buzwagi mines, owes the government a total of $40 billion in alleged unpaid taxes and about $150 billion in penalties and interest, the amount that Acacia has said is unrealistic.

The two parties are also expected to take their time discussing the government’s ban on metallic and mineral concentrates exports while giving special importance to the need to strike a win-win situation between them.  The ban has hit Acacia so hard financially, with the firm claiming that it has been losing more than $1 million in revenue each day from its Bulyanhulu and Buzwagi mines due to the government’s decision.

With the government enacting new laws on natural resources - the Natural Wealth and Resources Contracts (Review and Re-negotiation o017 and the Natural Wealth and Resources (Permanent Sovereignty) Act, 2017 – as well as approving the Written Laws Miscellaneous Amendments) Act 2017 to make significant changes on the management of Tanzania’s natural wealth, it is an open secret that the ongoing negotiations will also dwell on that issue.

The Prof Osoro committee report disputed the fact that the stability clause in the Mineral Development Agreements supersedes the sovereignty of the country such that changes instituted by new laws enacted by the Parliament could not be backdated.

In fact, this might have informed the passing of the new laws.