Mining

Barrick facing write-down if fails to win Tanzania support for Twiga JV: report

BARRICK Gold may be forced to impair a significant portion of its investment in the former Acacia Mining assets if a joint venture agreement between it and the Government of Tanzania is not ratified, said a report last week by DaMina Advisors, a Canadian political risk consultancy.

Agreement sign-off is caught up in a difference of opinion between Tanzania’s foreign minister, Palamagamba Kabudi and Attorney General, Adelardus Kilangi who “… do not agree on the contours of the agreement,” said DeMina Advisors. The joint venture, unveiled in October, should have been concluded before the end of 2019.

The terms of the joint venture – held in a company called Twiga Minerals Corporation – include the payment by Barrick to the Tanzanian government of $300m to settle all outstanding tax and other disputes that existed between the government and Acacia Resources, a company in which Barrick had about 64%.

Barrick bought out Acacia’s minorities as a precursor to concluding the joint venture with the Tanzanian government.

Other elements of the joint venture are that the government lift a long-standing export ban on concentrate produced by former Acacia Mining mines, and that the parties share future economic benefits from the mines on a 50/50 basis.

The joint venture agreement also allows for the establishment of an international dispute resolution framework.

Kabudi led the negotiations with Barrick, but Kilangi apparently believes the agreement is defective and “… not nationalist enough”, according to the report.

The matter has been recorded in the East African media; most notably, The Citizen which said the deadline for the joint venture agreement had been missed in December.

Tanzania is heading for a potentially contentious national election later this year. Although electoral victory is all but assured in 2020 for President John Magufuli – due in large part to an ongoing systematic weakening of the opposition by the ruling party – Magufuli’s sees his legacy largely resting on his nationalisation agenda, said DeMina Advisors in the report.

In lieu of completing the agreement, the Tanzanian government is asking Barrick to sell concentrate to one of its local smelters. Barrick was asked for its view on the report shortly before publication of this article.

The post Barrick facing write-down if fails to win Tanzania support for Twiga JV: report appeared first on Miningmx.

Source: miningmx.com

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