Tanzania government set to resolve tax row with mining firm

Tanzanian President John Magufuli has pledged to secure a bigger share of resource wealth and cut corruption, may also review the deal. [Photo: Courtesy]
JOHANNESBURG/TORONTO- Barrick Gold Corp has made progress in talks with the Tanzanian government to resolve a nearly 2-year-long tax dispute, but it is premature to say a deal has been reached, a person familiar in the matter told Reuters on Wednesday.

Government officials met last week with executives from Toronto-based Barrick and Randgold Resources Ltd, which Barrick is acquiring, to discuss the issue, said the source, who declined to be identified due to the sensitivity of the talks.

Acacia Mining, 63.9 percent owned by Barrick, is operating under a raw mineral export ban and faces a $190 billion tax bill from the Tanzania government.

That meeting “appears to have gone well,” but there is “nothing in writing,” said the source. “The next week is crucial.”

SEE ALSO :Tanzania charges Vodacom Tanzania MD with economic crimes

Bloomberg reported on Wednesday that Barrick had reached an agreement with the government on a $300 million payment, which Acacia will make in installments, with terms under review by a Tanzanian tax working group. It was unclear if the payment resolved outstanding tax issues.

Barrick, Randgold and Acacia declined to comment.

Any agreement requires approval by Acacia’s board of directors and shareholders. Tanzanian President John Magufuli, who has pledged to secure a bigger share of resource wealth and cut corruption, may also review the deal.

Under an October 2017 framework pact that has yet to be implemented, Barrick Executive Chairman John Thornton and Magufuli agreed that Acacia would pay the government $300 million, give it 16 percent ownership and split the economic benefits of its mines.

Randgold founder Mark Bristow, who is set to be the chief executive of Barrick after the merger closes in early 2019, has said he planned to intervene before the takeover closed and was confident he could break the impasse.

SEE ALSO :Vodacom alleged to have caused Sh470m loss to Tanzanian government

“If the deal with the Tanzanian government goes through, we believe this would be a win for Mr. Bristow even before he officially takes the reins,” said Credit Suisse analyst Fahad Tariq in a note on Wednesday.

It would also “make investors more confident in his ability to resolve other issues in the region (i.e. negotiating with the Congolese and Zambian governments on revised mining codes), in our view.”

Bristow also told Reuters he wanted to pull together Tanzania’s mining industry to address the increasingly acrimonious dispute.

Acacia also faces dozens of criminal charges, from tax evasion to money laundering.

For the latest news in entertainment check out Sde.co.ke and Pulser.co.ke , for everything sports visit Gameyetu.co.ke and ladies we have you covered on Evewoman

TanzaniaBarrick Gold Corptax disputePresident John Magufuli