Barrick and Tanzania make progress in tax row but no deal yet
Dar es Salaam — Barrick Gold has made progress in talks with the Tanzanian government to resolve a nearly two-year-long tax dispute, but it is premature to say a deal has been reached, a person familiar with the matter has told Reuters.
Government officials met a week earlier with executives from Toronto-based Barrick and Randgold Resources, 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% owned by Barrick, is operating under a raw mineral export ban and faces a $190bn 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.”
Bloomberg reported last week that Barrick had reached an agreement with the government on a $300m payment, which Acacia will make in instalments, 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 $300m, give it 16% ownership and split the economic benefits of its mines.
Randgold founder Mark Bristow, set to be CE 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.
“If the deal with the Tanzanian government goes through, we believe this would be a win for Bristow even before he officially takes the reins,” said Credit Suisse analyst Fahad Tariq in a note.
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 said 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.