Managing political and regulatory risks while operating abroad is now a business imperative for mining operators. Julian Turner talks to Rob Foulkes and Charlie Pembroke of consultancy Critical Resource about sustainability, licence to operate issues and avoiding mistakes of the past.
Anyone in search of a cautionary tale about the myriad risks faced by energy and mining companies operating abroad need look no further than Acacia Mining and its ongoing travails in Tanzania.
In 2017, the East African nation accused the London-listed gold miner of under-reporting output at its three mines and banned it from exporting powdered gold concentrate. The embargo cost Acacia’s chief executive and chief financial officer their jobs, and the company around $1m (£760,000) a day.
Fast-forward a year and Acacia blamed the export ban for its recent decision to scrap its 2017 dividend, after the company posted a $700m loss, and full-year, pre-EBITDA earnings fell 38% to $257m.
Acacia argues it has invested $4bn in Tanzania over the past 15 years but President John Magufuli appears determined to negotiate a greater share of the wealth for the country from its natural resources.
“The Acacia situation in Tanzania is really interesting and is being followed closely by companies in the country and elsewhere, particularly because Acacia and its majority shareholder Barrick Gold have been such huge investors in the country for so long and were pretty confident they could handle the political situation there,” says Rob Foulkes, associate director at Critical Resource.
For the rest of this article: https://www.mining-technology.com/features/risky-business-managing-political-instability-mining-industry/