Kabudi savours historic deal as Acacia share prices skyrocket

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CHAIRPERSON of Tanzania’s negotiating team that has been holding talks with Barrick Gold Corp, Prof Palamagamba Kabudi has said Tanzania actually benefits by 70-30 in the deal and not 50-50.

Prof Kabudi, who is also the Minister for Constitution and Legal Affairs made the remark yesterday as prices of Acacia shares on the London Stock Exchange shot up by 36.6 per cent. He noted that 50-50 would be effected after Barrick Gold Corp pays all taxes and levies to the government and met other ob ligations.

“We’ll be paid 50 per cent after the company has paid 30 per cent income tax, 6 per cent royalties, road and fuel levies, council levies and other social services. In Dominica, Argentina and Saudi Arabia where Barrick applies 50-50 per cent, the payments include all taxes and levies.

And, this area caused a tug of war during the negotiations and we won, it is not anywhere in the world. It’s a great success and we’ve made great strides,” he explained. Prof Kabudi explained further that Tanzania had tremendously benefited from the deal as despite the fact it is holding 16 per cent while Barrick holds 84 per cent shares, yet it reaps 70 per cent.

He further revealed that, contrary to popular belief, Tanzanian government had five major issues during the negotiations apart from mineral concentrates (mineral sands).

According to Prof Kabudi, President John Magufuli instructed them to use the negotiations to open new direction of management and use of natural resources including minerals. “Many people thought we’re going to negotiate on mineral concentrates alone, but the intelligence and plans of our Hon ourable President Magufuli was to go beyond that issue.

“If we focused on concentrates alone, then we could have ended only in the payments of concentrates. But now we’ve got more than the payments; that’s why all new laws have been accordingly honoured and considered in the deal,” stated Prof Kabudi.

He insisted that the deal was landmark for Tanzania and questioned intelligence of people who don’t recognise benefits accrued by Tanzania from the deal. “Anyone who does not know this then we should pray for him (to God) so that he/she is given brains, eyes and ears to get required understanding.

This deal has not happened anywhere in the World,” added Prof Kabudi. In another development, shares of the gold miner Acacia on the London Stock Market has surged after its majority owner Barrick revealed it had struck a tentative deal to resolve a bitter dispute with the Tanzanian government.

Shares of the firm shot up 36.6 per cent to 249.3p following the announcement, which is aimed at resolving a dispute that began when Tanzania introduced a ban on gold and copper concentrate exports in March that sent Acacia’s shares plunging.

The stock jumped to 255.50p after Canadian mining group Barrick - which owns 64pc of Acacia - unveiled a breakthrough in talks. On Thursday, the government and Barrick inked a historic deal to share profits accrued from the mine on a 50-50 ratio and grant the State a 16 per cent stake in its gold mines.

The negotiations were reached after discussions between experts from the two sides, focused on resolving a tax dispute involving the Canadian company’s subsidiary, Acacia Mining. The company also agreed to pay 300 million US dollars (700bn/- ) as sign of good faith while the negations were still underway.

According to the deal, Tanzanians will also get permanent employment and will no longer stay in camps because they had agreed to drop the contractual employment system. Under the new arrangement, the companies will also deposit income accrued from the business in local banks and transfer its offices from London and Johannesburg to Tanzania.

The two also resolved that the company’s headquarters will be located in Mwanza, but it can also open offices in other areas, and that Tanzania will also have representatives in board of directors of the companies.

In March this year, the President formed an eight-man probe team of experts led by Prof Abdulkarim Mruma to investigate and establish the amount of minerals and its value, contained in mineral sand exported abroad.

The team exposed massive losses of trillions of shillings in exported minerals. The report led to the formation of another team lead by Prof Kabudi, to represent the country in negotiations and look into how Barrick Gold Corporation would conduct its activities in the country for the benefit of all parties.

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