Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Two top executives at Acacia Mining (LON:ACA), Tanzania’s No.1 gold producer, are leaving the company following months of troubles in the Eastern Africa’s country and ongoing efforts of parent company Barrick Gold (TSX, NYSE:ABX) to put an end to the long-dragged dispute.
Chief executive Brad Gordon and finance director Andrew Wray will remain with Acacia until the end of the year to “ensure a smooth transition,” the miner said in the a statement.
“Brad will be returning to Australia for family reasons, while Andrew is pursuing an opportunity elsewhere,” the company said to explain the reasons of their sudden departure.
Chief executive Brad Gordon and finance chief Andrew Wray are both leaving by year-end amid parent company Barrick’s efforts to end a long-dragged dispute with Tanzania’s Gov’t.
Acacia has faced government pressure since March when the country imposed a ban on gold concentrate, which represents about a third of Acacia’s output. The accusations against the miner, in which Barrick has a 64% stake, include tax evasion and illegal operations, which prompted authorities to question staff and even block one of the firm’s senior executives from leaving the country in one occasion.
To make things worse President John Magufuli served Acacia in July with a $190 billion tax bill.
Barrick decided to intervene in hopes of reaching an agreement with authorities and leave any differences behind. Last month, it announced that Acacia would pay Tanzania $300 million and hand the government a 16% stake in three of its gold mines. But Acacia, which was not directly involved in the talks, said it could not afford such payment.
Additionally, the deal struck by Barrick did not resolve the row over alleged unpaid taxes.
Magufuli has refused to negotiate with Acacia and its executives. He has been dealing exclusively with Barrick’s executive chairman John Thornton. This is way some analysts believe the departures could help smooth a deal with Tanzania.
“Clearly not a positive given the depth of experience that Brad and Andrew have, but it could appease the Tanzanian government as Barrick will be able to say how they are sorting things out, even if it had nothing to do with them,” Investec said in a note to clients Thursday.
Others, such as Richard Hatch, analyst at RBC Capital Markets, are not so sure, Financial Times reports (subs. required):
With the challenging situation in Tanzania, and management’s limited role in negotiations with the Tanzanian government, we believe that this announcement will not come as a great surprise to the market. However, we do view the departure of Mr. Gordon and Mr. Wray as a negative for sentiment around Acacia shares, particularly given the positive changes both have made to the business since their respective appointments, both in terms of operational and financial performance.
Acacia shares suffered after the news, falling about 4% in early trade to 174 pence.
The miner has appointed the head of organizational effectiveness Peter Geleta as interim CEO. Jaco Maritz, the current general manager finance, will assume as finance chief. Both will take charge in January 2018.
4 Comments
PRINCE A D GAISIE
The heat from Tanzania Government is getting too hot for comfort in ACACIA BOARDROOMS. With these announcement a whole new restructuring must take place as the future is going to be TOUGH and we need those with thick skins.
Uhuru Mzalendo
Not surprising that these two had to go. They were slow in reading the new president and clung to their colonial mentality, whereby white dudes come into Africa, point at some minerals, dictate how they are going to have them and take as much as their greed can handle with no regard for those who own those resources. African leaders, Tanzania included have long being complacent in aiding this plunder. The new president is cut from a different cloth and does not have a price tag, so Gordon and Wrays statements always undercutting the governments statements on the issue was not going to fly. The arrogance with which they handled the whole issue should serve as a lesson to all white boardrooms wanting what Africa has. R.E.S.P.E.C.T. Times are changing and Africans are slowly waking out of the mental slavery. They have to be respected, even if you inwardly loathe them, just as much as they loathe you.
patentbs
Nice racist comment. About what to expect from a despot supporter.
I do not now and will never be have a stake in any company that has holdings in Tanzania, and will work to ensure no more investment dollars go there. One thing all must learn — its just business.. Both sides!
Get that right and the respect goes both ways.
Gary
Uhuru, you guys have had independence for around 50 years now. Surely you don’t need the “whites dudes” to come to your country and start mining for you. Why don’t you do it yourselves?