Tanzania mining model goes global

  • Barrick adopts the arrangement for mines in Papua New Guinea, Pakistan

THE Barrick Gold Corporation has borrowed Tanzania’s benefit sharing partnership model for the reopening of the Porgera mine in Papua New Guinea.

Barrick Gold President and Chief Executive Mr Mark Bristow said that there is a need to guarantee the longterm viability of the Loulo-Gounkoto gold mining complex and announced the gold firm’s plan to extend more investment in Mali.

“It’s worth noting that Barrick developed a highly successful benefit-sharing partnership for our Tanzanian operations which has since also been used as a model for the reopened Porgera mine in Papua New Guinea,” Mr Bristow told Malian media and stakeholders.

The same Tanzanian model was also adopted for its new Reko Diq copper and gold project in Pakistan, according to Barrick’s statement issued yesterday.

The President said that for over 29 years, Barrick had invested more than 10 billion US dollars in the Malian economy, with its mines accounting for between 5.0 per cent and 10 per cent of the country’s GDP annually.

In the past year alone, Barrick contributed more than 1 billion US dollars to the Malian economy.

“We continue to work constructively towards a global resolution of our differences and finding common ground on the key issue of sharing the economic benefits of our operations without damaging the future viability of these valuable contributors to the economy,” said Mr Bristow.

Also read: Barrick Bulyanhulu commits on environmental protection

However, he cautioned that the current economic and political climate in Mali had caused exploration companies to curtail or suspend their operations in the country, which would impact on gold production in the long run.

“In contrast, Barrick has been engaging with the National Directorate of Geology and Mines (DNGM) to grow our exploration footprint here, securing our ability to deliver real value to Mali and our stakeholders in the country,” he said.

The Porgera mine in Papua New Guinea (PNG) resumed operations last December after three years closure in tussle over benefit sharing between the government, local people and Barrick.

Thereafter last year in December, gold started pouring again in the first quarter of this year. This follows the satisfaction of the conditions to the Porgera Project Commencement Agreement, in which a new ownership structure was agreed upon.

The equity in New Porgera is shared 51 per cent by PNG stakeholders, including local landowners and the Enga provincial government, and 49 per cent by Barrick Niugini Limited (BNL), a joint venture between Barrick and Zijin of China.

The Tanzania benefitsharing terms came in 2019 after the then President, late John Magufuli banned the exportation of concentrates by Barrick Gold’s Acacia in 2017, and the government ordered the miner to pay 90 billion US dollars in unpaid taxes.

Following the dispute, the government entered into negotiations with Barrick Gold and the two sides signed a deal that partly demanded the formation of a new mining company in Tanzania through a joint venture.

Barely a year after it was established, Twiga Minerals Corporation demonstrated the value-creating capacity of a true partnership between a mining company and its host nation.

Twiga is a joint venture between Barrick and the government of Tanzania and oversees the management of Barrick’s assets in the country as well as the implementation of the economic benefit-sharing agreement.

It was formed when Barrick took over the operations of the former Acacia Mining in September 2019 and subsequently entered into a framework agreement with the government.

In terms of the agreement, Barrick agreed to pay the government 300 million US dollars to settle past disputes with Acacia.

In addition to the first 100 million US dollars tranche of the settlement, Barrick’s assets in Tanzania have since paid more than 200 million US dollars to the government in taxes and royalties, and in October 2020, Twiga declared a maiden interim dividend of 250 million US dollars.

Dr Magufuli said then that some people opposed when the government started renegotiating with Barrick but the maiden dividend was the fruit of the talk’s outcome.

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