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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