Diamonds may be forever but gold is the stand of measure for and store of wealth and in this Covid-19 era the skittish investor is not storing his wealth in cash currency but gold nuggets. It is no wonder, the world’s second-largest gold digger Barrick Gold Corporation is planning to increase its investment in Tanzania’s gold mining sector.
Barrick is already Tanzania’s largest gold miner owning three major sites North Mara, Bulyanhulu and Buzwagi mines.
While gold is its main business, the company wishes to go beyond the boundaries of the coveted precious metal and, as Barrick President and Chief Executive Mark Bristow put it, invest in other areas within the country.’ He CEO made the state during a courtesy visit with Tanzania’s President Samia Suluhu at State House.
During the visit, yesterday in the country capitol Dodoma, Barrick’s President Bristow aka ‘Zulu Boy’ briefed the president of state of their joint venture in all Barrick’s stakes in the country. Tanzania entered into a partnership with Barrick gold forming what is now Twiga Minerals Corporation Limited in which Tanzania owns 16% stake in all of Barrick’s three gold mines spread across the country.
As the Wall Street Journal puts it, ‘Barrick has agreed to share half of the mines’ royalties, cash distributions and other economic benefits with the country.’ In this regard, Bristow reassured Madam President Samia that his company is honouring the pact to ensure mutual benefit for both parties concerned.
Notably, he pointed out Barrick’s increased provision of employment for Tanzanians in an effort to increase financial inclusion and local content. He said Barrick not only offers jobs to artisans and lower staff positions to locals but entrusts top management to Tanzanians including high positions like as executive director, resident manager and head of finance.
“Currently my company has enhanced cooperation with Tanzanians in provision of various services at the mine whereby an estimated 70 per cent of procurement are from Tanzania,” local media quotes the CEO.
He was also keen to site Barrick’s commitment to environment conservation citing particularly efforts done at the North Mara Gold Mine, including set up of a water treatment system that recycles and reuses water produced from the mining activities at the site.
Zulu Boy’s Gestures Of Good Will Paying Off
Zulu Boy, that’s the aka that CEO of Tanzania’s largest gold miner goes by. A Tanzanian saying suits him well ‘mtoto wa nyumbani’ (a child from our home) and the African proverb ‘mcheza kwao hutunzwa’ describes Zulu boy’s achievement adequately.
The proverb translates to ‘he who dances at home is tipped well’ and that is exactly what Mark Bristow has done. The Zulu boy healed ailing wounds of a company that was going under and brought it back to the lime light. From locking horns with the government to partnership in a common stake company, from court house face offs to pleasantries at the State House, the Zulu Boy has danced at home and he is now been tipped.
During his meeting with President Samia, the latter reassured the Zulu Boy that ‘…her government will continue to cooperate with the Barrick by implementing all that they have agreed with the aim of ensuring that mineral resources benefit both sides,’ writes local media.
In fact, President Samia went ahead and expressed gratitude to Mark Bristow for what she said is ‘…his readiness to cooperate with her government.’
Tanzania, Barrick Stakes in Twiga
As of year, Tanzania and Barrick Gold, a Canadian company, entered into several agreements that not only gave the government control of 16 per cent stake in each of Barrick’s three mines Bulyanhulu, North Mara and Buzwagi, but they also agreed on splitting future economic benefits from the mines on a 50/50 basis.
How did all this come about? Well it was not sugar and candy that was for sure. A bitter tag of war had ensued between the government and the previous subsidiary of Barrick, Acacia Gold. It all culminated in 2017 when the late President John Pombe Magufuli banned export of ore concentrates following the outcome of a long investigation that uncovered what the president described as ‘unacceptable losses to the country.’
The investigation looked into whether mining companies were been honest in their declaring of export content among other things. The investigation revealed that companies were under declaring not only content of ore exports but the value of the content as well.
The president effectively enacted a total ban on ore concentrates which covered copper,gold and several other precious metals. Acacia Gold was also thrown into the spot light for alleged tax evasion among other charges.
The troubled company’s shares immediately plunged 13% and after about two years of trying to stay afloat, Acacia finally fell under the pressure and was bought out by its parent company, Barrick Gold.
Barrick Gold settled for new terms with Tanzania and among other things, agreed to pay taxes and fines owed to the government. Barrick paid a whopping $300 million to the government of Tanzania effectively ironing out the relationship creases. And it is at this point where the new partnership under Twiga Minerals Corporation came about.
Largest GDP Earner: Gold Overtakes Tourism
As of last year, gold became Tanzania’s leading foreign exchange earner out doing tourism. The fallof the tourism sector is also the very reason why gold shot up, the Covid-19 global pandemic.
Owing to the travel restrictions that came about due to the pandemic, the tourism sector all but collapsed, well, it is also due to investor concerns raised by the pandemic that the value of gold shot up.
Investors opted to store the value of their wealth in gold rather than dollars fearing currencies may collapse due to the pandemic. As such, demand for gold has been increasing ever since the pandemic hit. Gold producers like Tanzania and companies like Barrick just happen to be in the right line of business.
A 2020 report by the Bank of Tanzania (BoT) showed that gold exports increased by 46.8 percent to clock $2.5 billion in the financial year ending May. AT that same time, the figures were not so good on tourism earnings which plummeted from $2.5 billion to $2.3 billion in giving way to gold as the new leading foreign exchange earner.