Tanzania Says Barrick Agrees to Pay Money Owed to Government

DAR ES SALAAM (Capital Markets in Africa) – Tanzania’s presidency said Barrick Gold Corp. is willing to reimburse money that’s owed to the government, after President John Magufuli accused subsidiary Acacia Mining Plc of failing to pay billions of dollars of taxes. Acacia surged as much as 11 percent.

Barrick Executive Chairman John Thornton met Magufuli for talks in the commercial capital, Dar es Salaam, on Wednesday, the presidency said in an emailed statement. Barrick confirmed the meeting but not the details of what, if anything, had been agreed.

“Thornton said his company is ready to hold talks with Tanzania that will consider the interests of both sides and is ready to pay all the money it’s expected to pay Tanzania,” Magufuli’s office said. The government welcomes such talks and will establish a panel of experts to negotiate how the company will pay the money and how it will conduct future operations in the country, according to the statement.

The meeting took place two days after the Tanzanian leader accused Acacia of operating illegally and demanded it remit unpaid taxes. The accusation followed an audit of the country’s mineral exports over the past 19 years that found mining companies failed to remit taxes of as much as 108.5 trillion shillings ($48.5 billion) since 1998.

The two sides agreed to discussions to reach a “mutually acceptable solution,” Acacia said in an emailed statement, adding that the company will provide a further update during a scheduled conference call on Thursday. Acacia spokesman Giles Blackham declined to provide further details.

Toronto-based Barrick, which owns 64 percent of Acacia, also agreed on Wednesday to help Tanzania build a smelter, according to the presidency’s statement, which didn’t provide further details.

Acacia shares traded 10 percent higher at 300.80 pence by 2:06 p.m. in London.

“The meeting was constructive and open, with the parties agreeing to enter into negotiations to seek a resolution that is in the best interests of all stakeholders, including Tanzania, Barrick, and Acacia,” Barrick said in a statement Wednesday.