ESTABLISHMENT of a joint venture mining firm, Twiga Minerals Corporation Limited, makes the government, for the first time in the country's independence history, to have legal secured interests and open a new era of productive partnership in the mining industry.
This follows some remarkable successful negotiations and subsequent signing of landmark agreement between the government of the United Republic of Tanzania and the Barrick Gold Corporation, the second-largest gold mining company in the world, with its headquarters in Toronto, Ontario, Canada.
The negotiations could not only lead to the formation of the mining firm, but also to payments of 250bn/- as compensation paid by Barrick Corporation out of 300 US dollars the company agreed to pay to settle all outstanding tax and other disputes.
Besides ending the prolonged dispute, the deal signed by Barrick President and Chief Executive Officer Mark Bristow and Tanzanian Minerals Minister Doto Biteko in Dar es Salaam, sets a template for negotiations with other firms.
Reports show that the government is now renegotiating mining agreements with all existing companies to get a minimum of 16 per cent stake in each large-scale mine, in line with mining laws passed in 2017.
More importantly, the resolution ensures that Tanzania gets more income from its natural resources, one of the major policy objectives of President John Magufuli since he assumed office. Minerals are a major source of foreign exchange and make up the majority of exports from Tanzania.
However, the signing of the agreement in question was not an easy task. Thanks to the bold decision by Dr Magufuli, of working on his promises as per implementation of the ruling Chama Cha Mapinduzi (CCM) 2015/2020 election manifesto.
After his nomination on July 21st, 2015, as CCM's presidential candidate for the 2015 election, one of his priorities he marketed during the campaign was the mineral sector. He promised to take actions to further promote the Mining Industry and increase its contribution to Gross Domestic Product (GDP).
The Head of State also pledged to ensure his government protects natural resources for the benefit of all Tanzanians. In order to have legal power over the matter, the government, through the Attorney General (AG), moved for amendments or enactments of laws to facilitate the process smoothly.
When dissolving the 11th Parliament in Dodoma on June 16th, 2020, Dr Magufuli pointed out massive achievements obtained in the mineral sector, including the control of the export and transportation of raw minerals outside the country and enactments or amendments to laws regulating mining activities.
Likewise, when presentation of the 2020/20201 general budget, Minister for Finance and Planning, Dr Philip Mpango, pointed out that the amendment of the laws has facilitated negotiations between the government and all major mining companies with the aim of acquiring 16 per cent of the State's shares.
It is the passing by the National Assembly of the Natural Wealth and Resources (Permanent Sovereignty) Act of 2017, which resulted in the establishment of Twiga Minerals Company, which the government owns 16 per cent and Barrick Company owns 84 per cent of the shares.
The government and Canada's Barrick Gold Company jointly owned Twiga Minerals Corporation, which has already been incorporated and registered by the Business Registrations and Licensing Agency (BRELA).
Twiga Minerals Limited headquartered in Mwanza, a port City on the shore of Lake Victoria, in northern Tanzania, is to manage the Bulyanhulu, North Mara and Buzwagi mines.
Foreign Affairs and East African Cooperation Minister Professor Palamagamba Kabudi, who was the Chairman of the Negotiating Committee of the government of Tanzania, was quoted as saying that the talks between the government and Barrick Gold successfully concluded the operation of Acacia Mining.
Barrick President and Chief Executive Mark Bristow said the agreements introduced a new era of productive partnership with the government of Tanzania and would ensure that Tanzania and its people would share fully in the value created by the mines they hosted.
“Twiga Minerals represents a structure which allows the government and the people of Tanzania to be involved in the decision-making of everything that we do together,” Bristow was quoted as saying.
According to him, the agreements also marked the end of the long impasse between the government of Tanzania and Acacia which had led, among other things, to the closure of North Mara and the freezing of export concentrate from the two other operations.
Barrick Gold Corporation, the largest shareholder of Acacia Mining Limited's issued shares, holding approximately 64 per cent, took over the management of the mines after its buy-out of its minorities. Acacia had been operating three gold mines in the country of Buzwagi, Bulyanhulu and North Mara.
Prior to the negotiations, in August 2016, just a year after assuming the highest office, Dr Magufuli announced a ban on the export of metallic mineral concentrates. It was reported that some miners in Tanzania had been sending heaps of earth containing metallic ore to Asia and Europe for smelting.
However, in March 2017, the country's largest gold miner, London-listed Acacia Mining Limited flouted the ban. The president subsequently ordered the seizure of more than 277 of its containers at the port of Dar es Salaam.
The Head of State then formed two teams to investigate the matter. The first team investigated the contents of the containers, while the second one dealt on the value concentrates exported since 1998 to 2017 for smelting.
Presented "explosive" reports in May and June 2017 alleged Acacia had under-declared the value of the ore, skewing the amount of tax it had to pay.
The first probe team under Prof Abdulkarim Mruma, the Head of the Geological Survey of Tanzania, revealed that all minerals found in the 277 containers, including gold, silver, sulfur, copper and strategic minerals were worth between 829.4bn/ and 1.438trl/-.
Prof Mruma was quoted as briefing the President that his team unearthed huge quantities of gold concentrate in the mineral sand investigated at between 671 grammes per tonne and 2, 375 gram per tonne, an average of 1,400 grammes per tonne.
This means that there were 28kgs of gold in one container weighing 20 tonnes of mineral sand. Reports also shows that an average of 1.4kg of gold per tonne of mineral sand were identified in the containers, seven times as much as reported by Tanzania Minerals Audit Agency(TMAA).
The second report, concerning the economic impact of the mineral sands exports, which was led by Prof Nehemiah Osoro, revealed that Acacia had under-declared revenues and tax payments over a number of years, occasioning loss to the government of over 380tri/-.
Prof Osoro recommended for summoning and questioning of officials involved in the shoddy mining agreements, through which the nation incurred huge losses in government revenue.
Armed with the findings, Dr Magufuli's government slapped the Acacia Company with a mammoth tax bill of 190 billion US dollars, covering the 17 years it had been operating in the country. Though Acacia denied any wrongdoing, its parent company Canada-based Barrick Gold, opted for the talks.
Barrick Gold Corporation Executive Chairman, Prof John Thornton, flew by his private jet all the way from Canada to Dar es Salaam and held talks with President Magufuli in the presence of Canada's High Commissioner to Tanzania Ian Myles and the then Minister for Constitution and Legal Affairs, Prof Kabudi.
Prof Thornton made commitment at State House that the management of Barrick Gold Corporation was willing and ready to hold talks with Tanzania based on win-win situation, a win for Tanzania, a win for Barrick and their subsidiary company – Acacia, to ensure the evaded tax is settled.
He is also on record informing the media that after having extensive conversation with the President, he felt optimistic that they will reach a resolution that will benefit all parties involved.
President Magufuli said apart from agreeing to pay the government dues, Prof Thornton also agreed to cooperate with Tanzania in installing a smelting plant in the country.
In October 2017, Barrick offered to pay the Tanzanian government 300 million US dollars to resolve outstanding tax claims and would share equally any economic benefits from Acacia's operations in Tanzania with the government in future.
Following the successful negations, in January 2020, President Magufuli released for sale to potential customers the 277 containers of mineral sand that had been seized at the Dar es Salaam Port, immediately after the official signing of nine agreements with Barrick Gold Corporation.
Such signing concluded the talks that facilitated to the formation of joint venture between Barrick Gold Company and the government of Tanzania, a firm that will oversee the operations of mines formerly operated by the Canadian mining company.