The government of Tanzania and Barrick Gold Corp. have finally reached an agreement that will settle all disputes between the government and mining companies formerly operated by Acacia Mining. The final agreements have been submitted to the Tanzanian attorney general for review and legalization.
The terms of the agreement include a payment of $300 million to settle all outstanding tax and other disputes; lifting the concentrate export ban; sharing future economic benefits from the mines on a 50/50 basis; and establishment of a unique, Africa-focused international dispute resolution framework.
In conjunction with the agreement, a new operating company called Twiga Minerals Corp. has been formed to manage the Bulyanhulu, North Mara and Buzwagi mines. The government will acquire a free carried shareholding of 16% in each of the mines and will receive its half of the economic benefits from taxes, royalties, clearing fees and participation in all cash distributions made by the mines and Twiga. An annual true-up mechanism will ensure the maintenance of the 50/50 split.
Barrick President and Chief Executive Mark Bristow said the agreements introduced a new era of productive partnership with the government and would ensure that Tanzania and its people would share fully in the value created by the mines they hosted.
This agreement also marked the end of the long impasse between the government and Acacia, which led to the closure of North Mara and the freezing of export concentrate from the two other operations.
Barrick took over the management of the mines after its buyout of the Acacia minorities last month. Since then, it has negotiated the reopening of North Mara and is engaging with the mines’ host communities to restore their social license.
“Rebuilding these operations after three years of value destruction will require a lot of work, but the progress we’ve already made will be greatly accelerated by this agreement,” Bristow said. “Twiga, which will give the government full visibility of and participation in operating decisions made for and by the mines, represents our new partnership not only in spirit but also in practice.”
He noted that Tanzanian nationals were already being employed and trained to replace expatriate staff as had been done very successfully at Barrick’s other African operations.