Handout photo from Africa Barrick Gold of the Buzwagi mine, located in northwest TanzaniSupplied
Just days after being hit with a shocking $190-billion (U.S.) tax bill, the African subsidiary of Barrick Gold Corp. says it is facing new pressure tactics from Tanzanian authorities, including the detention of a senior employee and the seizure of his passport.
It's the latest escalation of an increasingly nasty conflict between the Tanzanian government and the country's biggest private investor, Barrick subsidiary Acacia Mining, which says it has invested $3-billion in its Tanzanian gold mines over the past 15 years.
Acacia is already losing $1-million a day in revenue as a result of a Tanzanian government ban on the export of gold concentrate. The government also accuses it of massive tax fraud, which the company has hotly denied.
The dispute could lead to mine closures or even a government takeover of some mines, analysts say.
Barrick announced on Wednesday that it will begin negotiations with the Tanzanian government next week in an effort to resolve the export ban, which has triggered a collapse in Acacia's stock price. Acacia's shares have plunged by more than 50 per cent this year on the London Stock Exchange.
Analysts say the conflict is producing political benefits for Tanzanian President John Magufuli, who has portrayed himself as a patriotic defender of his country against foreign companies that are cheating the country. But other commentators have warned that the government is destroying the country's investment climate with absurdly inflated demands.
The tax bill of $190-billion in taxes and penalties, revealed by the company on Monday, is the equivalent of almost 200 years of Acacia's annual revenue, or four times the country's GDP.
On Friday, the company disclosed that a "senior international employee" of its subsidiary, Pangea Minerals Ltd., had been detained on Friday morning at the country's main airport in Dar es Salaam and prevented from leaving. His passport was seized and he was kept in detention "for a period of time" until a company lawyer was able to secure his release, Acacia said in a statement.
It provided no further details on the incident, but it said the detention was part of "increased levels of pressure from government agencies on Acacia employees in the past 48 hours."
Last week, the Reuters news agency reported that two senior local Acacia employees had been detained and questioned by Tanzanian authorities at an airport.
The company said last week that it was having trouble in renewing the work permits of its foreign staff. It confirmed that its employees were being "interviewed" by authorities, but denied that any were threatened with expulsion.
"Acacia reiterates that it operates in full compliance with Tanzanian law, has declared everything of commercial value that we have produced and has paid all appropriate royalties and taxes," the company said in its statement on Friday.
Mr. Magufuli has threatened to shut down all foreign-owned gold mines if the owners delay their negotiations over the tax dispute. "I will close all mines and give them to Tanzanians," he said.
Barrick owns 63.9 per cent of Acacia, and Acacia's three mines in Tanzania account for about 10 per cent of Barrick's global gold production. Barrick showed its concern about the tax dispute by sending its chairman, John Thornton, to Tanzania last month to meet Mr. Magufuli.
If the export ban continues, Acacia says, its mining operations at its flagship Bulyanhulu mine will not be sustainable after the end of September.
But despite the potential job losses, the campaign against Acacia has been popular among many Tanzanians. "We have been robbed enough, and the time is now for demanding what rightfully belongs to us," one Tanzanian newspaper said in an editorial column, urging every Tanzanian to rally behind Mr. Magufuli in his campaign against the foreign miners.
The dispute in Tanzania is just the latest in a rising wave of resource nationalism in Africa, where a growing number of governments allege that they are being cheated of their fair share of taxes by foreign investors.
Acacia insists that its gold production and financial statements are carefully checked by independent auditors using international standards.
If the Tanzanian government is correct in its allegations of a huge under-reporting of gold production, Acacia would be the world's third-biggest gold producer and two of its Tanzanian mines would be the world's biggest gold producers, the company said. In reality, its gold production is less than one-tenth of the amount alleged by the government, it said.