AnalysisMining

TWIGA MINERAL CORP: Escaping resource curse in Tanzanian way

A tale of how jointly owned firm fuels economic growth and contributes to wellbeing of the people.

MONDAY June 12, 2023

A plant belonging to one of the Barrick Gold’s subsidiaries in Tanzania. PHOTOS | COURTESY

By Deus Bugaywa

The Tranquility News Correspondent, Tanzania

As its name implies, the Tanzania-based Twiga Mineral Corporation stands out of the mining industry’s crowd in Africa, a continent mired in ‘resource curse’.

Twiga is a Kiswahili name for giraffe — a tallest living animal with a long neck and forelegs, cladding a coat pattern with brown patches separated by lighter lines.

Giraffe takes advantage of its height to browse juvenile leaves and buds on treetops where few other mammals, if any, can reach.

Just as the giraffe does in pristine grassland of the Tanzania’s grand Nyerere National Park, Twiga Mineral Corp is distancing itself from the rampant paradox of plenty on the continent.

In a preamble of his book titled Escaping Resource Curse, George Soros, a Hungarian-American businessman and philanthropist, describes the term ‘resource curse’ as the failure of resource-rich countries to benefit from their own godsend

Barrick president and chief executive officer Mark Bristow (Left) and Tanzania President Samia Suluhu Hassan display a dummy cheque in past event. Barrick-Twiga Future Forward Education Programme is to build 1,090 classrooms, 1,640 ablution blocks and 270 dormitories across 161 schools in Tanzania.

The mineral corporation is attempting to prevent Tanzania from plunging into resource curse by invigorating economic growth of the country and contributing to wellbeing of the people.

Tanzania has curved out a reputation for devising a model for sealing deals that lay ground for the extractive industry to pay dividends to the national coffers without igniting conflicts as is the case with almost all other resource-rich African countries.

Barrick Gold too deserves a pat on the back for agreeing with the Tanzania Government in October 2019 to settle all disputes pitting the East African country and mining companies initially belonging to Acacia Mining Plc before Barrick took them over.

High on the agreement included payment of $300 million to settle all outstanding tax and other disputes, lifting of concentrate export ban, sharing of future economic benefits from the mines on a 50/50 basis, and establishing a unique and an Africa-focused international dispute resolution mechanism.

Also agreed was the inception of Twiga Mineral Corporation, a new operating company, to man Bulyanhulu, North Mara and Buzwagi gold mines which Barrick Gold had re-acquired, with the Tanzania Government securing 16 per cent stake in each of them.

Barrick Gold president and Chief Executive Officer Mark Bristow was in January 2023 the first investor in Tanzania to be installed Sukuma Chief of Bulyanhulu due to contributions the mine makes to the surrounding community. PHOTO | FILE

Tanzania has been pocketing half of the economic benefits from taxes, royalties, clearing fees and participation in all cash distributions made by the mines and Twiga.  An annual true-up mechanism will ensure the maintenance of the 50/50 split.

Since its inception, Twiga Minerals Corp has been demonstrating a value-creating capacity of a true partnership between a mining company and its host nation.

The Tanzania Government has been improving investment climate and embracing partnership with the world’s largest miners, among other measures, to double the extractive industry’s contribution to the economy.

Barrick has pumped $2.4 billion into the Tanzanian economy since it penned the agreement. Last year, it paid $303 million in taxes, royalties, levies, dividends and shareholder loan repayments, let alone local suppliers’ share standing at $476 million.

The workforce in all mines consists of 96 per cent Tanzanians, with 45 per cent of new hires drawn from the surrounding communities.

I believe it is the first partnership of its kind in Africa, so much value has been delivered in such a short period,” Mark Bristow, Barrick’s President and CEO.

The mines have, through community development committees, invested more than $10 million in projects meant for improving healthcare, education, access to potable water as well as road infrastructure.

“I believe it is the first partnership of its kind in Africa, so much value has been delivered in such a short period,” says Mark Bristow Barrick’s President and CEO, explaining:

“With the framework agreement now fully implemented, we have settled most of the landowner disputes and are well on our way to ensure we are fully compliant with our environmental permits as well as with the government’s local content legislation.”

Local content factor

The Tanzania’s Mining Act No. 7, 2017, which amended the Mining Act, 2010, paved way for the Mining (Local Content) Regulations, 2018, to impose local content requirements to ensure Tanzanians benefit from the mining supply chain.

The Regulations aim at developing local skills to build a skilled workforce and a competitive supplier force in the extractive sector.

A section of a 10-acre farm in North Mara Gold Mine project awaiting horticulture seedlings. PHOTO | FILE

They forbid a foreign firm from providing any type of service at a mine’s settings in the country if it does not form a joint venture company, with Tanzanians owning at least a 20 per cent equity stake.

“I couldn’t be owning this company had it not been this regulation, Barrick North Mara nurtured me through local content to this stage,” says Rhobi Gibai, who at his tender age of 33 years runs a multimillion construction company registered under level 6 with the country’s Contractors Registration Board.

Her company started with a capital of $1,300 by cleaning dumpers. “Through Barrick special entrepreneurship trainings, I grew my business within a short period,” says Rhobi, adding:

“I now own modern construction machines and employ 15 permanent employees, and close to 100 part time personnel, pending the nature of the contract we have at a particular time.”

The mining sector’s contribution to the national gross domestic product (GDP) increased from 3.4 per cent in 2015 to 5.2 per cent in 2019. The extractive sector now boasts contributing 7.3 per cent.

Operations in progress at one of the Barrick Tanzania’s gold mines. PHOTO | FILE

Nevertheless, the Tanzania President, Dr Samia Suluhu Hassan, continues improving the sector for it to contribute at least 10 per cent of the GDP come 2025.

“The sixth phase government intends to accelerate this success by enforcing the Mining Act, 2017, controlling smuggling, and removing investment barriers,” President Samia says in her 2021 Parliament inaugural speech.

Earlier this year, the company affirmed a $30-million pledge to expand education infrastructure across Tanzania in partnership with the government.

Dubbed Barrick-Twiga Future Forward Education, the programme is determined to build 1,090 classrooms, 1,640 ablution blocks and 270 dormitories across 161 schools countrywide.

It aspires to accommodate nearly 49,000 out of 190,000 estimated students who are expected to join A-level in July this year. The first $10 million was disbursed in April, 2023.

Tanzania President Samia Suluhu Hassa (Right) meets Barrick Gold Corporation Chief Mark Bristow (Left) in Dodoma in July 2021 to review progress at the Canadian miner’s operations under Twiga Mineral Corporation. PHOTO | FILE

According to Bristow, North Mara has already spent $1.9 million on 87 primary and secondary schools in Tarime District, Mara Region, 14 of which are the best performing schools in the district.

Bulyanhulu has, in turn, spent $1.8 million on 80 educational projects around the mine and is currently building a Vocational Education Training College Centre at Bunango Village. Barrick’s investment around the mine gave 7,557 Tanzanian girls access to education in 2022.

“Last year, North Mara was officially recognised as Tanzania’s largest taxpayer, and National Social Security Fund awarded Bulyanhulu Best Compliant Employer prize.

“North Mara and Bulyanhulu also received the first and runner-up recognition awards, respectively, for export of minerals and generation of foreign currency.

“They’ve both come a very long way and we look forward to continuing that journey through our Twiga partnership with the government,” Bristow says,

The sixth phase government intends to accelerate this success by enforcing the Mining Act, 2017, controlling smuggling, and removing investment barriers,” Tanzania President Samia Suluhu Hassan tells Parliament during her maiden speech in the House in 2021.

In may 2022, Barrick announced it would spend $6 for every ounce of gold its two mines sold on improving social services in the surrounding communities.

It committed up to $70-million investment in value-adding national projects, including mining-related training, skills development, scientific facilities for Tanzanian universities and in road infrastructure.

Since Barrick and the Tanzania Government jointly formed Twiga Mineral Corp, the then dilapidated North Mara and Bulyanhulu have been revived and have returned to profitability.

The mines are now world-class assets, with the potential for joining the Barrick’s Tier One gold complex family, and becoming the 7th in the company Tier one family tree.

The joint venture enabled ecologically friendly closure of of Buzwagi Mine in 2021. At its peak, Buzwagi was the second largest operating mine in Tanzania, employing over 3,000 people.

To ensure Buzwagi remains an economic powerhouse for local communities and Tanzania, Barrick is establishing Buzwagi Special Economic Zone (BSEZ).

Buzwagi was an open-pit gold mine situated six kilometres south-east of Kahama District in Shinyanga Region, Tanzania. Barrick Gold is establishing Buzwagi Special Economic Zone (BSEZ) which will see the pit filled and generate simila benefits the mine used to provide the local authorities and the community. PHOTO | COURTESY

The BSEZ aims at turning the mined space into a business zone, generating similar benefits with which the mine used to provide the local municipality and its surrounding communities with taxes, fees, and jobs.

The feasibility study for the BSEZ showed it has the potential for creating approximately 3,200 jobs per year, generating over $150,000 a year in service levies in a short term, as much as $1.3 million in a long term, and fetching $4.5 million Pay As You Earn in a short term and more than $18 million in a long termΩ

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