Mixed reaction to Tanzanian investment deal

Source: Embassy Mag
Date: 10 Oct 2021


Questions are being raised about how Tanzania’s plentiful mining sector will be affected by a potential gold rush from Canadian extractive companies, after the two countries concluded a foreign investment agreement.

Tanzania became the latest country to wrap up talks for a Foreign Investment Promotion and Protection Agreement with Canada after Tanzanian President Jakaya Kikwete flew to Canada and met with Prime Minister Stephen Harper on Oct. 4. 

Mr. Kikwete praised Canada at a joint Parliament Hill press conference for pioneering Tanzania’s mining sector to the world, saying Canadian mining companies “remain the backbone of investments in mining.” There is still plenty of room for more Canadian companies in his country, he added.

The Mining Association of Canada praised the FIPA, with president Pierre Gratton saying that the new deal is “one very helpful tool to help attract investment into Tanzania.”

“Tanzania is already considered to be, among African countries, a fairly attractive place to invest,” he said.

But not everyone is seeing the deal as a positive step. Jamie Kneen, a spokesperson for Mining Watch Canada who deals with Canadian companies operating in Africa, said the agreement is mostly just “a political gesture.”

Some of the explorations are happening in fragile ecosystems, including a wetland area and a game reserve, he argued, and local community groups are already beginning to voice concerns.

If the FIPA encourages more Canadian companies to expand further into volatile environmental and tribal areas, he added, “it’s going to create more environmental problems and more human rights problems,” since he argued Tanzania does not have the capacity to monitor and regulate the industry.

“Why would [Canada] be protecting this kind of activity?” he said. 

Some reports have shown that Canada’s reputation has taken a beating amongst Tanzanian locals over mining projects owned by Canadian firms. A Globe and Mail article from Aug. 16, for example, referred to Canadian company Barrick Gold Corp.’s North Mara project as “one of the most controversial Barrick Gold mines in the world,” and reported that there has been “a steady drumbeat of violent clashes and civilian deaths in recent years.”

The article states there were 19 villagers killed at the mine from 2009-10, while trying to collect waste rock, and the company is allegedly investigating the sexual assault of about 10 women at the mine after they were arrested by security for trespassing.


‘Stepped up their efforts’

Barrick Gold is currently in discussions with China National Gold Group to sell the majority of the company’s arm in Tanzania, called African Barrick Gold plc. 

Attempts to contact Barrick Gold were unsuccessful, but MAC said that Barrick Gold has been making improvements in Tanzania. 

The company has “really stepped up their efforts in the last couple of years to try to address...the underlying fundamental conditions that are giving rise to the conflict there,” said Mr. Gratton.

The only issue that Canadian mining companies are currently having, he said, is the potential for the Tanzanian government to ask for a small percentage of ownership of projects, which he said “can be a disincentive” to investment, and can cause “jitters” for foreign companies. 

The FIPA could possibly address this, he said. The text of the agreement has yet to be released.

MAC recently signed a deal with the Revenue Watch Institute, Publish What You Pay Canada, and the Prospectors and Developers Association of Canada, to develop a framework that would require the mandatory publication of payments to governments both domestically and abroad by June 2013. Barrick Gold was an early and strong supporter of that initiative, said Mr. Gratton.

Brendan Marshall, the director of economic affairs at MAC, added that certain aspects of FIPAs can potentially make improvements for local economies and quality of life. 

Mr. Marshall said one aspect of hammering out an investment deal is discussing “performance requirements,” which examines potential economic spinoffs for local businesses. This can cause a “trickle down effect,” argued Mr. Marshall, bolstering other sectors of the local economy and providing jobs. 

The Harper government’s “expectation is that Canadian companies will be responsible actors who will respect the law and work with local authorities,” wrote Mr. Harper’s spokesperson Andrew MacDougall in an email.

Mr. MacDougall highlighted another announcement, also on Oct. 4, that Canada is beginning six new development initiatives in Tanzania—two of which are related to the mining industry. 

The first, the Extractive Industries Transparency Initiative, will see Canada give $2.75 million over a five-year period to the Tanzanian government to compel mining companies to publish what they pay to the government, and vice versa. 

The second project will see Canada contribute $2.9 million over five years to the Tanzania Minerals Audit Agency to “create a more reliable and accurate system of auditing revenue and environmental practices in the industry.” That will also be run by the Tanzanian government.

Attempts to contact other small Canadian extractive companies in Tanzania were unsuccessful, with several declining to comment, and others not returning phone calls or emails.

By Ally Foster 

Embassy Mag