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Oct 20, 2019

Barrick agrees to pay US$300 million to end Tanzania dispute

Commodities update: Barrick settles Tanzania dispute, AltaGas Canada to be taken over


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Barrick Gold Corp. agreed to pay US$300 million to the Tanzanian government to end a long-running dispute that it says destroyed the value of its subsidiary Acacia Mining Plc’s assets.

As part of the deal, which still must be approved by Tanzania’s attorney general, the government will be given a 16-per-cent stake in a renamed company known as Twiga Minerals Corp., Barrick said Sunday in a statement. The payments are to settle all outstanding tax and other disputes, the gold miner said. The agreement means a ban on export of concentrates will be lifted, Barrick said.

“Rebuilding these operations after three years of value destruction will require a lot of work, but the progress we’ve already made will be greatly accelerated by this agreement,” Mark Bristow, Barrick’s chief executive officer, said. “Twiga, which will give the government full visibility of and participation in operating decisions made for and by the mines, represents our new partnership not only in spirit but also in practice.”

The breakthrough ends a disagreement between Tanzania and a Barrick subsidiary that started in 2017. Tanzania banned the export of unprocessed metals by miners, subsequently presenting Acacia with a US$190-billion tax bill, equivalent to two centuries of revenue.

Acacia, which owned the three mines in Tanzania, was bought by Barrick this year. For almost two years, Barrick has been leading negotiations with Tanzania over terms of the deal, first negotiated by the company’s Executive Chairman John Thornton.

The agreement means that Tanzanians would share fully in their nation’s mineral wealth, Barrick said.