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.
Tanzania will no longer allow Acacia Mining Plc to manage its mines in the country and will only work with the company’s parent, Barrick Gold Corp., to resolve the two-year impasse that has stymied operations, a government spokesman said.
“We will no longer work with Acacia,” Hassan Abbasi said Tuesday by phone. “Under no circumstances can Acacia be a party to the agreements, or have any role in the operation or management of the Barrick mining subsidiaries in Tanzania. The ball is now in Barrick’s court.”
Acacia has been at odds with Tanzania’s government since July 2017, when the state handed the London-listed gold producer a $190 billion tax bill, saying it under-declared bullion exports. Barrick has since led discussions with the government and, in an effort to solve the impasse, surprised the market last week with an informal plan to buy out Acacia’s minority shareholders.
In response to Toronto-based Barrick’s buyout proposal, Acacia advised its shareholders last week not to take action as it considers developments and tries to verify Tanzania’s position. On Tuesday, a spokesman for Acacia had no comment other than to reiterate that the company is continuing to seek clarification from the government.
Abbasi said the government of Tanzania will continue to try to resolve the dispute based on a previous tentative agreement with Barrick.
“The initial agreement that we reached with Barrick in October 2017 is the one that is guiding the negotiations,” Abbasi said.
Acacia has been at odds with Tanzania’s government since July 2017, when the state handed the London-listed gold producer a $190 billion tax bill, saying it under-declared bullion exports
In a 2017 meeting between President John Magufuli and Barrick Executive Chairman John Thornton, it was tentatively agreed that Acacia would pay $300 million to the government to settle tax claims and would split future returns from operations with the country. At the time, Acacia criticized the move and blamed Barrick for its worsening relationship with Tanzania after Thornton took over negotiations.
Last week, Barrick said the government of Tanzania had made clear it won’t negotiate a settlement with Acacia. Barrick Chief Executive Officer Mark Bristow has repeatedly spoken about the breakdown of the relationship between the two companies, and between Acacia and the government.
A Barrick spokeswoman said Tuesday it had no additional comment.
“Barrick and Acacia have to sort out their differences so that we can move forward and resolve the dispute,” Abbasi said.
(By Ken Karuri and Danielle Bochove)
