New Barrick eyeing several options to end Tanzania tax dispute, says CEO
Mark Bristow says he is confident the row will be resolved
Toronto — The new Barrick Gold Corporation is considering options for its stake in Acacia Mining including possible sale, as Barrick works to end a nearly two-year-long tax dispute in Tanzania that has effectively shuttered operations there, CEO Mark Bristow said on Wednesday.
The new Barrick, which began trading on Wednesday following its merger with Randgold Resources, holds a 64% stake in Acacia, which has not been able to export gold during the tax row.
Bristow expressed confidence that the conflict, which began when the Tanzanian government slapped Acacia with a $190bn tax bill in March 2017, would be resolved.
“This has been a very complex and challenging situation where no-one has won. It’s untenable and will be resolved,” said Bristow, who previously led Randgold.
Under an October 2017 framework pact that has yet to be implemented, Barrick executive chair John Thornton and Tanzanian President John Magufuli agreed that Acacia would pay the government $300m and 16% ownership and split the economic benefits of its mines.
Barrick could buy out the rest of Acacia it does not already own, or could split up the company, among other options, Bristow said.
“This conflict has destroyed lots of value. We need to make sure there’s enough value to work out a solution that various interested and affected parties get something that’s fair and proper for them,” he said, adding the company would provide more information in the second week of February.
Barrick agreed to buy Randgold in September in an all-stock deal valuing the Africa-focused miner at $6.5bn. It was the biggest transaction in years in the gold mining industry, which is under investor pressure to cut costs and better manage capital.
Bristow plans to follow Randgold’s strategy of deploying most of its staff at mine sites rather than centralised offices, giving local staff more autonomy as part of a new approach to slash bureaucracy and boost returns in the face of a sagging gold sector.
“When you’re right there in the thick of things, your decisions are immediate,” said Bristow. “If you’re in a fathead office far away, your ability to even understand the situation is retarded.”
Barrick shares fell 3.1% in New York on Wednesday, compared with a slight rise in the Dow Jones industrial average. Gold prices also rose on Wednesday.
Across the new company, Bristow said his focus will be on making sure Barrick automates and streamlines operations and management.
For instance, he said, Barrick will take a page from Randgold’s use of one shared processing facility for three of its mines in Mali by doing the same in Nevada, where Barrick owns two mines.
Bristow said his vision for a leaner Barrick has the support of legacy leaders from both Randgold and the original Barrick.
The company also wants to attract younger, more tech-savvy talent drawn to more hands-on work, Bristow said.
The new Barrick will adopt Randgold’s strategy of using contractors to do jobs the company doesn’t have the skills for, Bristow said. The company also plans to retain ownership of its mines and ores, he said.