Canada’s Barrick Gold (TSX: ABX) (NYSE: GOLD) and Tanzania inked a deal on Friday that grants the African nation stakes in the three gold mines the company operates there, ending a long-running tax dispute and setting a template for negotiations with other firms.
The ceremony comes three months after both parties reached an agreement in which Barrick accepted to pay $300 million to settle outstanding tax and other disputes. The deal also includes the lifting of a concentrate export ban and the sharing of future economic benefits from the miner’s operations in the country on a 50-50 basis.
It also ratifies the creation of Twiga Minerals Corporation, a company jointly owned by Barrick and the Tanzanian government, which will oversee the management of the Toronto-based miner’s local operations.
North Mara, Buzwagi and Bulyanhulu mines, which Barrick acquired through the takeover of Acacia Mining in September last year, are now owned 84% by the gold giant and 16% by the East African nation.
Chief executive Mark Bistrow said on state TV he was happy that Barrick’s “long safari” in Tanzania had ended well. Safari means “journey” in Swahili.
Casting himself as a “Zulu boy” born in Zululand, Bristow called the pact signed today “historical.”
“Many people said your criticism will chase away investors … what it’s done is challenge the mining industry and all of us to embark on something where we win together or lose together,” he said.
Following today’s ceremony, Barrick and Tanzania will continue to work on implementing other aspects of the signed deal. In particular, the gold miner plans to partner with the University of Dar es Salaam and commit up to $10 million in funding over a 10-year period for training and skills development in the mining industry.
The company has also budgeted $50 million for brown and greenfield exploration in Tanzania this year.
Barrick added it would earmark up to $40 million to upgrade the road between Bulyanhulu and Mwanza, as well as constructing a housing compound and related infrastructure.
Tanzania, Africa’s fourth-largest gold producer, is revising other mining and energy agreements as part of a law passed in 2017 by President John Magufuli’s government, aimed at securing more revenue from the country’s resources.
The new regulations include an act that requires parliamentary approval for future agreements, which must “fully secure” the interests of Tanzanians. It also restricts exports of raw minerals, repatriation of funds and access to an international dispute resolution mechanism.
Other changes in the Mining Act set up a commission to regulate the industry, overhauled the requirements for the storage, transportation and processing of raw minerals. It also increased royalty rates and government shareholding in mineral right.
(With files from Reuters.)