Wednesday, August 17, 2011

THE SILENT MILLIONAIRES.





Why North Mara gold mine has not known peace in 10 years of operation



By Tom Mosoba

As Tanzanians digest the news of a plan to sell the multinational Barrick Gold Corporation’s shares to the public through the Dar es Salaam Stock Exchange, the fortunes of a few local businessmen and politicians could leap to new highs.

Known to have quietly accumulated fabulous riches, by local standards, these privileged few may just be on their way to becoming billionaires overnight once the new company, Africa Barrick Gold (ABG), which will take over the parent firm’s assets in Tanzania, is established.

The silent investors will be hoping to further consolidate their wealth, as the mining giant looks poised to significantly raise its profitability in the next few years through the ABG capitalisation plan, which will also include trading on the London Stock Market to raise funds for more investment in Tanzania and other African countries.

So far, their vehicle to success have been the lucrative contracts entered into with Barrick Tanzania Limited for periodical payments after they surrendered their gold mining and prospecting licences in the areas where the company operates.

Barrick, which has operated in the country over the last 10 years, owns the four largest gold mines in Tanzania, namely, North Mara, Bulyanhulu, Buzwagi, and Kahama.

In the new structure, ABG has been registered as a subsidiary of Barrick Gold Corporation to look after its interests in Africa, currently only represented by assets in Tanzania. It will retain a 75 per cent stake in the new company and sell the remaining 25 per cent through the stock markets, beginning with London next month, and later Dar es Salaam, according to top local officials.

Inquiries in the recent past by the Sunday Citizen revealed that well-heeled businessmen and politicians, who used their influence and connections to acquire primary mining licences in the area, earn millions of shillings every year in royalties. The royalties, according to our sources, are pegged on the profit made by the respective mines.

Now, the same group of people, who have largely remained in the background, could be among the first to line up for the DSE offer and further enhance their “investments” and fortunes. Things may even be better, with the just released financial results for 2009, showing that the Tanzanian operations raked in $693.4 million, from which Barrick made $249.5 million in earnings before interest, tax, depreciation and amortisation. The four mines yielded 716,000 ounces of gold. This is expected to rise to 1 million ounces over the next few years.

While the DSE listing plan has largely drawn early positive reactions, it remains to be seen how the communities surrounding the mines will receive the news.
One such place is Nyamongo in Tarime district of Mara region, where the insecurity plagued North Mara gold mine is located. It is one of the mines, which have lucrative royalty contracts with some individuals.

However, the host community feels that its members were unfairly evicted by the government to create room for the mining firm.

Neither Barrick’s management nor the government deny there are such contracts even though none was willing to provide details on the identity of these individuals or companies, citing privacy considerations.

The commissioner for minerals, Dr Peter Kafumu, and the Tarime District Council vice-chairman, Councillor Machage Bartholomew Machage, separately confirmed the existence of such contracts when interviewed by Sunday Citizen for this report.

In the recent past, the North Mara gold mine, established some 15 years ago, has experienced bloody clashes between security personnel and locals clamouring for a share of what they claim is their right. The sporadic clashes have cost scores of lives of villagers, especially young men, shot dead by police, as they attempted to storm the mine to scoop gold sand.

The lucrative contracts with some private individuals are among the reasons that have stoked local resentment against Barrick and government.

The community is angered that a handful of people reap handsome earnings in their locality, while they have been condemned to abject poverty. This kind of agitation has turned a majority of them into diehard critics of the mine.

Mr Machage, the councillor for Nyangoto Ward in Nyamongo, within which the mine is located, said the locals felt cheated after thousands of them were evicted despite having mining licences held in their trust by village governments.

“Our people are angry that the government refused to honour community titles and has denied them their only source of income,” said Mr Machage.

“The mine has created several millionaires but our people get nothing,” the civic leader told the Sunday Citizen in a recent interview.

Five villages, namely Genkuru, Kewanja, Nyangoto, Kerende and Nyamwaga, he added, used to mine gold using title Nos. 38810, 38809, 36853, 38808 and 38811, until the mine was established by the Africa Mashariki Gold Mine (AMGM) in 1995.

But as it changed hands from AMGM to East African Gold Mine (EAGM), then to Placer Dome of Canada, and finally to Barrick, the villagers were relegated to the periphery, having lost their claim to the mining titles.

But Dr Kafumu said there was nothing illegal about the contracts some individuals had entered into with Barrick. “They had valid mining licences allocated by the government and were free to engage with the mine,” he said.
The problem in North Mara, the officer said, was to allow the mine to co-exist with human settlements. It is one of the shortcomings that would be reviewed in the impending new mining law, he explained.

He said the old mining law was also silent on compensation for those moved out of their residential areas to create space for a huge investment, which he conceded was the source of the ongoing conflicts.

The villagers’ claims, Dr Kafumu said, were difficult to prove because some were mere verbal agreements that were not binding in law once the mine stated changing hands. He said those that held valid primary mining licences were among those reaping millions from contracts with Barrick.
But the licence issue is not the only problem bedeviling North Mara’s operations.

Grinding poverty, low levels of education and inadequate social services have caused deep frustration in the community. With lack of clean water and electricity, poor roads, and health facilities and inadequate secondary school places, all eyes had been focused on the mining company.

Local leaders and villagers said they had signed agreements with AMGM to provide social services, ranging from health, education, and roads to water but the promises had not been fulfilled.

Mr Gati Chacha Michibi was the chairman of a committee formed to link the mine and the community. It, however, collapsed amid the hostilities that culminated in the setting ablaze of Barrick equipment in 2008 worth billions of shillings.

“I blame the company for not fulfilling its promise to work with us and implement joint development projects,” he said.

Mr Machage said ways must be found for locals to benefit from the existence of the mine. While the community lacks electricity and water, Barrick has both directly supplied to the mine, bypassing the locals.

But Barrick is fighting back, it cannot alone be blamed for failure to supply water, build hospitals and schools and roads. The company’s spokesperson, Mr Teweli Teweli, said the hostilities must end to allow for constructive engagement.

Authorities in Tarime readily admit that efforts to contain insecurity around North Mara gold mine have largely failed, explaining among other reasons, why the government moved last year to establish a special police operation zone to respond to the unique challenges.

Widespread illiteracy, compounded by lack of enough schools and a high dropout rate by students to prospect in gold, rampant unemployment, cattle rustling, clan clashes over land and low interaction of locals with other communities are other factors fuelling the hostile environment in the area.



THE CITIZEN.(Feb 2010)

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