Photograph — Financial Times

The longstanding dispute between the Tanzanian government and Canadian miner, Barrick Gold was finally settled on Friday with a deal that could be seen as a huge win for the East African state.

Prior to the agreement, both parties had announced in October that Barrick pays $300 million to settle outstanding tax and other disputes, while the government would lift an export ban on concentrates. Also included was the sharing of future economic benefits from the company’s mines.

The legal and environmental tussle originally started with Acacia Mining, a Barrick subsidiary that was eventually bought out in September after facing several allegations ranging from environmental pollution, human rights violations and tax evasion that culminated in a ban on its mineral concentrates exports in 2017 and the closure of two mines.

With the signing of the deal, Tanzania will take 16 percent stakes in three gold mines owned by Barrick. And according to the government, the confiscated containers of gold and copper concentrate owned by the company could now be exported to the benefit of Twiga Minerals, a new joint venture established to manage Barrick’s mines.

Besides ending the prolonged dispute, the deal, signed by Barrick CEO Mark Bristow and Tanzanian minerals minister Doto Biteko in Dar es Salaam, sets a template for negotiations with other firms. Reports show that the government is now renegotiating mining agreements with all existing companies to get a minimum 16 percent stake in each large-scale mine, in line with mining laws passed in 2017.

More importantly, the resolution ensures that Tanzania gets more income from its natural resources, one of the major policy objectives of President John Magufuli since he assumed office about three years ago. Minerals are a major source of foreign exchange and make up the majority of exports from Tanzania, one of Africa’s biggest gold producer.

Like Tanzania, many African governments in recent times have taken a more hardline approach in the mining sector as they look to extract more gains from their natural resource. Governments often present higher charges or try to get stakes in mines as a means of industrializing their mining sector, exerting greater control over the industry. Apart from Tanzania, this pattern appears in South Africa, Zambia, Mali, Botswana, and Guinea.

This trend is referred to as “resource nationalism” which experts say poses serious risks to long-term foreign investment in much of Africa’s mining sector. But the Barrick Chief Executive disagreed with this notion while giving a speech at the signing ceremony.

“Many people said your criticism will chase away investors … what it’s done is challenge the mining industry and all of us to embark on something where we win together or lose together,” Bristow said, striking a somewhat conciliatory tone.

In addition to owning a stake in each of the Barrick’s mines, the government also has 16 percent undiluted shares in Twiga Minerals, which Bristow also commended. “Twiga Minerals represents a structure which allows the government and the people of Tanzania to be involved in the decision-making of everything that we do together.”

After the Barrick agreement, mining licenses from now on will be issued by Tanzania’s Mining Commission under the guidance of the president, a government official said. Meanwhile, stakeholders in the industry have welcomed the deal as a sigh of relief not just for Barrick or the mining industry in Tanzania.

Barrick Gold Corporation is known to be the second-largest gold mining company in the world, with its headquarters in Toronto, Canada. The company has said it has a budget of $50 million for brown and greenfield exploration in Tanzania this year.

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