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Acacia Sustainability at Crossroads, Transparency Issues Persist


BY Staff Writer, Nairobi and Dar es Salaam

Recently, investigation reveal, the Board of Directors of Acacia in London has been preoccupied with the drive to assure the shareholders that the company’s mining operations in Tanzania are stable and promise more prosperity. 

Papers seen by this paper shows that the message put across repeatedly in the Acacia reports are that Acacia reserves at the Tanzanian mines are still a long way from exhaustion, and that the Management has managed to ensure continued operations and production. 

According to our sources in London, based on the reports, while good governance and good relations have been key to continued profitability of the Tanzanian operations, the Acacia Board was made to commend the effective cost management, which has made it possible for Acacia to thrive while operating in a hostile environment.

Sources in London further confirm that Acacia Board of Directors seeks to demonstrate its ability to defy and hold down the Government of Tanzania and ensure that the existing lopsided arrangement whereby the country does not fairly benefit from the mining operations is securely in place. 

“To assure the shareholders of the effective protection of their interests, the Acacia Board of Directors have ignored the interventions by Barrick Gold Corporation, which is seeking to resolve the discord triggered by Acacia’s disrespect of the Tanzanian laws, policies and authorities, through negotiations,” said the source.  

However, contrary to to the positive picture painted to the Board in London, public and private mining experts in Dar es Salaam, have revealed that Acacia wants the status quo; that’s why at the most critical point in the negotiations Acacia caused to be instituted, arbitration proceedings that would derail the negotiations, which were on the verge of being concluded.

“The Barrick negotiations with the Government of Tanzania were almost derailed and stalled for about eight months. As the Tanzania Government was contemplating to end the negotiations, the merger of Barrick and Randgold brought in a new impetus to proceed and settle the Acacia discord,” says a mining expert familiar with negotiation process.  

                                          Acacia Continues to Hide Facts
Apparently this is also being put to extreme trial by relentless meddling by the Acacia Board of Directors. It is time the basic facts are wisely examined. The first is whether all is well with Acacia operations in Tanzania. Apparently the Acacia Board does not disclose the true picture of the Tanzanian operations.

Costs are running high and may soon become unsustainable. Acacia has accumulated very high tax bills and some through court judgments which have already been pronounced and are due for enforcement any time the negotiations with Barrick/Randgold run aground.

Over the past two years some of the profitable operations had to be placed under maintenance. The Board does not disclose the real cost of restarting the Bulyanhulu mine. The North Mara mine is under imminent closure for serious violations of environmental laws.

Reports of massive pollution of the environment and the poisoning of the adjoining communities are pushing the regulatory authorities to close the mine. Environmental rectification requirements are threatening to impose debilitating costs if Acacia is to survive in Tanzania.

The combined effect of regulatory liabilities have greatly diluted if not altogether wiped the value of the Acacia operations.

The second is whether it is possible for Acacia to continue operations in Tanzania. The Board of Directors of Acacia has been so disrespectful and combative against the Government of Tanzania to the extent that the Government, according to impeccable sources, has vowed that mining operations in Tanzania can only continue if Acacia ceases to exist and a completely new arrangement is agreed upon.

While Barrick had negotiated accommodative arrangements to rescue Acacia interests, the Acacia Board is said to very busy campaigning against the Government of Tanzania and portray it as a demon who should not be tolerated in a civilized world.

The Acacia Board is falling short of calling for the removal of the current Government in order to protect the interests of the shareholders. This is an extreme dimension in any relations with a host Government.

What it spells is the irreparable breakdown of the relations. The Government of Tanzania is understood to have made it very clear that there will be no discussions with Acacia. The Acacia Board is insensitively making effort to gain access to the Government, presumably to demonstrate how wrongly the Government is handling the discord. This is wishful attempt, says an expert adding the Government won’t allow that.

The attempt is to impress upon the Government the dire costs it is likely incur if Acacia is not allowed to have its way. That the outcome of the arbitration proceedings will be very devastating, unless the Government yields.

“Clearly what Acacia is doing and contrary to expectations, is to harden the resolve by the Government to protect the best interests of the people of Tanzania against Acacia’s greedy and disrespect to the nation which owns the resources,” says another industrial expert.

The question is whether Acacia can win and have its way. Barrick has done all that can be done and together with Randgold they are on the brink of rescuing the Tanzanian operations.

Recently, source aware of the agreement confirm, they negotiated a hold off whereby the 
Government will put on hold measures to recover all the taxes that have become due and collectable, including the attachment of all ore exports.

The Government has given Barrick time to sort out any impediments to the closure of the negotiations, before enforcing the closure of the North Mara mine for environmental violations. It is clearly a matter of time before Acacia is forced to cease operations in Tanzania.

“Unfortunately, the truth which the Acacia Board of Directors has been desperately trying to hide is surfacing. The Government maintains that there is incontestable evidence of very aggressive tax planning by Acacia that has led to massive tax evasions,” says John Mbutta, a tax consultant.  

That there is also evidence of outright refusal by Acacia to abide with the terms of the MDA in respect of operations of offshore accounts, which have been seriously abused to achieve fraudulent ends. Slowly, but steadily the world is starting to listen to Tanzania.

There is a general consensus that the MDA relied upon by Acacia is a raw deal which Acacia should agree to rectify and bring fairness to the investor-host country relations. There is agreement that Acacia went into overdrive in the bid to get international support against the Government of Tanzania and forgot to foster the avenue of amicable dialogue.

It therefore shut itself out. There is sense in what Barrick and Randgold are doing. The world is also starting to agree that there is legitimacy in what the Government of Tanzania is trying to achieve even if there are reservations in some of the measures taken so far.

The clear message that is surfacing is that an obstinate Acacia Board of Directors render Acacia completely unsustainable in Tanzania. It is just a matter of time when the Acacia card-house starts crumbling. Those who saw it early left timely.

The Acacia Board of Directors have eyes but in a typical greed-led style, they are attempting to vigorously promote Acacia in order to prop up share prices and lure the public into investing in a collapsing venture.

“Tanzania is open for business but only on fair terms. The President is delivering on his promise to get a better deal for the people. Barrick has shown the vision and with renewed impetus the leadership to drive forward a genuine partnership. It is time for change in the mining industry and Acacia belongs in the Tanzania of the past not the future,” says an expert in mining from Durban, South Africa. 

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