The State, Barrick Gold to share profits on a 50-50 basis
THE government and Barrick Gold Mine Corporation have finally buried the hatchet with a resolution to share profits accrued from the mine on a 50-50 ratio and grant the State a 16 per cent stake in its gold mines.
The negotiations were reached after discussions between experts from the two sides, focused on resolving a tax dispute involving the Canadian company’s subsidiary, Acacia Mining. The company also agreed to pay 300 million US dollars (700bn/- ) as a show of good faith while the negotiations were still underway.
Speaking during the handover of a negotiations report to President John Magufuli in Dar es Salaam yesterday, the Minister of Justice and Constitutional Affairs, Prof Palamagamba Kabudi, said that the resolutions had brought great changes in supervising and managing the resource in the country.
“These efforts should not be ignored ... the 50-50 system proposed by Barrick is a great transformation in the sector not only in Africa but also in the world at large because the company, as majority shareholder, has agreed to the profits being shared equally,” Prof Kabudi said.
He said Tanzanians would also get permanent employment at the companies and will no longer stay in camps because they had agreed to drop the contractual employment system. He said under the new arrangement, the companies will also deposit incomes accrued from the business in local banks and transfer its offices from London and Johannesburg to Tanzania.
“ We have resolved that the company’s headquarters will be located in Mwanza, but it can also open offices in other areas, the aim being to make sure that the company’s office is located where the mining activities are being conducted,” Prof Kabudi said.
The Minister further noted that “although the government will have a 16 per cent stake and earn 50 per cent from profits accrued, it will also have representatives in board of directors of the companies.
He added that most of the services at the mines would now be offered by local companies and individual Tanzanians. The company has also agreed to strengthen social services in areas surrounding the mines, basing on priorities of specific villagers.
Prof Kabudi said they had furthermore resolved that the company sets aside a special budget for contributing to research for the establishment of a plant for processing mineral sands and construction of a modern laboratory for testing the concentrates. He said that the govern ment would also have ownership of all strategic metals which would be obtained.
In March this year, the President formed an eightman probe team of experts led by Prof Abdulkarim Mruma to investigate and establish the amount of minerals and its value, contained in mineral sand exported abroad. The team exposed massive losses of trillions of shillings in exported minerals.
“You are today witnessing the billions of shillings our country is losing,” he stressed, noting that the amount of gold per tonne found in the mineral sand, according to the report, was between 671 - 2,775 grams, translating to between 7.8 tonnes to 13.16 tonnes for all 277 containers detained at the Dar es Salaam Port.
“If we take 23.1 tonnes as the weight of the container as opposed to the standard 20 tonnes, you find that there are 15.5 tonnes of gold in all 277 containers, which translates to two lorries and one pick-up truck loads of gold; imagine that,” the visibly annoyed President Magufuli remarked.
The report led to the formation of another team led by Prof Kabudi, to represent the country in looking into how Barrick Gold Corporation would conduct its activities in the country for the benefit of all parties.