{"id":2332,"date":"2017-07-12T16:35:37","date_gmt":"2017-07-12T16:35:37","guid":{"rendered":"https:\/\/solomonappiah.wordpress.com\/?p=2332"},"modified":"2022-04-07T21:23:16","modified_gmt":"2022-04-07T21:23:16","slug":"renegotiate-or-annul-unconscionable-mining-agreements","status":"publish","type":"post","link":"https:\/\/sunesishq.com\/notes\/renegotiate-or-annul-unconscionable-mining-agreements\/","title":{"rendered":"RENEGOTIATE OR ANNUL UNCONSCIONABLE MINING AGREEMENTS"},"content":{"rendered":"

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Africa as a continent is home to quite a sizable portion of the world’s minerals and natural resources. In development circles, it is not uncommon to hear the question, “why is Africa so rich in resources and yet their citizens are poor and their continent underdeveloped?” The answer usually given is that African leaders are corrupt. While this may be true in some cases, in others it is not. But even when it is true, other supra factors compound the intra factors such as corruption. What do I mean?
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Africa’s challenges must be understood from an intra-continental context, inter-continental and supra-continental context if an accurate solution is to be prescribed. Today, we’ll consider the supra context. This is the realm or space within which transnational corporations (TNCs) relate with nations\u2014especially within the so-called developing world. This space is mostly un-regulated and in many cases not characterized by equity during contract negotiations.
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When one takes a cursory view at most of the mining contracts in sub-Saharan Africa, the host nations gets almost nothing, in most cases, less than 10% of what their resources are worth, while the TNCs take 90% or more. There needs to be a massive “as-one” review, renegotiation or annulment of unfair and unjust contracts and agreements with TNC and multinational corporations (MNCs).
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THE TANZANIAN CASE<\/h2>\n

This article is about the country Tanzania and its dealings with a TNC called Acacia Mining plc in Tanzania. It is an FTSE 250 company and is 64pc owned by Barrick Gold of Canada. It was rebranded as Acacia Mining Plc in 2013. As per the company’s website, it is registered as a UK public company headquartered in London and listed on the London Stock Exchange and the Dar es Salaam Stock Exchange in Tanzania. It operates 3 mines, “all located in north-west Tanzania, together with several exploration projects at various stages of development, including exploration land holdings in the highly prospective greenstone belts in Western Kenya, Western Burkina Faso and Western Mali” according to the company’s website.
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In a recent article<\/a> in The Guardian titled, A brutal lesson for multinationals: golden tax deals can come back and bite you<\/em>, the author remarks that:
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“[Acacia] is the largest gold producer in the country [Tanzania], and has long faced criticism for the amount of tax it pays there. Acacia’s “payments to government” report released last week shows that the company, which operates three mines in Tanzania, exported $1bn (\u00a3770m) of gold, copper and silver last year [2016], and ONLY PAID 8% of this in taxes and royalties to the government.
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What’s more, between 2010 and 2015, it paid out $444m in dividends to shareholders WHILE NOT PAYING ANY<\/span> CORPORATE INCOME TAX in the country”.
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The conduct of this TNC can aptly be captioned “daylight robbery in Tanzania”. The CEO Brad Gordon has admitted<\/a> that the original mining agreement was not<\/span> <\/span>EQUITABLE. He added, “The industry can be its own worst enemy when it sits down and agrees these terms, it’s gonna come back and bite us. And in this case it has”.
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In 2016 after much pressure from the Tanzanian government and public, Acacia has agreed to bring forward corporate tax payments it has not paid.
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In addition to the above, the President of Tanzania John Magufuli has accused “the company not only of striking an unbalanced deal but of massively under-reporting its gold exports to evade tax” as reported in The Guardian article<\/a>. It turns out he was right. Working on an informed hunch earlier this year, the government “decreed a ban on exports of unrefined metals, preventing Acacia from selling partially processed “concentrate”. The following ensued<\/a>:
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In April, as containers piled up at the Acacia gold mines and the port of Dar es Salaam, Magufuli appointed two committees of academics to investigate their contents. In May, the committees declared that the president’s suspicions were correct and the concentrate contained eight times more gold than the company had reported, as well as several other rare minerals such as iridium and ytterbium<\/span>“.
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If the committees’ findings are accurate, the extent of the undervaluation is enormous, amounting to almost $4bn annually<\/span> (one tenth of Tanzania’s GDP). Magufuli has responded forcefully, saying, “We should summon [Acacia] and demand that they pay us back our money. If they accept that they stole from us and seek forgiveness in front of God and the angels and all Tanzanians and enter into negotiations, we are ready to do business.”
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This is not unbelievable. This is one of the ways TNCs plunder Africa via illicit financial flows<\/a>. If Africa is ever to develop, such leaks should be plugged. In any case, why would these academics falsify findings? African governments have always known these leaks exist but few have been willing to even broach the subject because TNCs control in many cases more resources than small African nation. In a world where the media is favorable to the highest bidder<\/a>, TNCs have an edge over these nations. It is thus admirable to see governments such as the incumbent in Tanzania attempt to tame this chimera that has ravaged much of the so-called “developing world”.
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MAIN ISSUE\u2014DEVELOPMENT<\/h2>\n

Summary of allegations against Acacia Mining plc include:
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