Barrick Gold’s Tanzanian headache: Blood and Stone – by Geoffrey York (Globe and Mail – Report on Business Magazine – October, 2011)

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Across the cavernous pits and the mountains of waste rock, the alarm wails eerily, warning that an explosion is imminent. Dozens of villagers gather silently at the edge of a pit, past the holes that have been torn in the fence, waiting for their chance.

Then comes the blast. As a plume of smoke curls into the sky, the scavengers scramble into the pit, eager to prise a living from the freshly smashed rock.

Suddenly the police appear, careering over the rocky road from another corner of the vast mine. The pickup truck full of armed men in green uniforms bounces across the wasteland like a scene from Mad Max. The truck hurtles toward the scavengers, but is halted by a boulder that they have pulled across its path. By the time the police can leap down and move the boulder, the scavengers have scattered into the nearby trees, where they wait for their next opportunity.

This is the daily ritual of conflict at the North Mara gold mine in Tanzania: Intrude and retreat, pursue and withdraw—punctuated by flare-ups that sometimes leave people dead.

For an eyewitness, it’s difficult to reconcile this cycle of violence with the avowed community-friendly policies of the mine’s parent company, Barrick Gold Corp. and the professed goal of its founder, Peter Munk, of making good corporate citizenship the “calling card that precedes us wherever we go.” How did a leading Canadian corporate citizen and the world’s top gold producer get itself into this contradiction? And why does Barrick continue mining in a place where bloodshed and corruption seem inescapable?

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The alternate image of Barrick, fostered by watchdog activists, is that of a rogue company. These critics are happy to point out that North Mara is not the only trouble spot in the Barrick empire. Many of the same problems seen here—violence, pollution, sexual assault—have occurred at Barrick’s Porgera gold mine in Papua New Guinea. After repeated denials, Barrick this year finally admitted the validity of some of the sexual assault allegations at Porgera, and dismissed some of its employees. But the remedial measures were accompanied by one of Munk’s most controversial comments: that “gang rape” is a “cultural habit” in Papua New Guinea.

While activists are targeting Barrick worldwide, it is Tanzania that still puts the biggest dent in Barrick’s reputation, especially after police killed at least five intruders at North Mara this year.

Much of the conflict stems from the history of the region: its poverty, its political culture, and the warrior tradition of its people. But another key factor is Barrick’s determination to press on at the mine in an era when the price of, and demand for, gold keeps rising but sources of the precious metal are ever harder to come by.

The seven villages around North Mara, among the poorest and most underdeveloped in Tanzania, are located in the northwestern corner of the country, 30 kilometres from the Kenyan border. Despite the region’s isolation, its gold wealth has been known since the 19th century, when small-scale mining began. Today the region is a key contributor to Tanzania’s gold sector, which has emerged as the country’s most valuable export, accounting for 40% of export earnings.

As a one-party socialist state until 1992, Tanzania barred foreign investors and prevented the development of a modern mining industry. By the time the country was finally opened to foreign miners in the mid-1990s, about 40,000 villagers in northwestern Tanzania had become dependent on artisanal mining, using shovels and pickaxes to search for gold in small mine shafts and surface pits. Most were forced to give up their livelihood when North Mara and other commercial mines began operating a decade ago.

The villagers belong mostly to the Kuria people, who were traditionally cattle farmers. Colonial records described them as “unruly and backward.” They became notorious for cattle rustling and inter-clan fighting, and joined the Tanzanian army in huge numbers. But as they resisted the collectivist policies of the 1970s, the area became an opposition stronghold, neglected by the government and lacking in basic services.

To help each other understand the daily clashes on their mine site, Barrick managers pass around copies of an American ethnographic treatise, Kuria Cattle Raiders: Violence and Vigilantism on the Tanzania/Kenya Frontier. But not everything can be explained by ethnicity. There are other crucial factors that people outside Barrick point to.

One is the cheek-by-jowl existence of the villagers and the mine. Anyone who flies into the mine’s airstrip can see the surreal sight from the air: hundreds of houses huddled next to the pits and waste heaps. Some dwellings are so close that rocks from the waste heaps tumble against their walls. Children play with empty tear-gas canisters from the daily clashes.

About 10,000 families have been displaced by the mine’s growth since 1997, according to a prospectus issued last year by Barrick’s subsidiary, African Barrick Gold, which is 74% owned by the Toronto-based mining giant. The relocations began with North Mara’s original owner, Afrika Mashariki Gold Mines Ltd., which sold the mine in 2003 to Vancouver-based Placer Dome Inc.

Relocation has not guaranteed safety. Magige Nyamhanga, a 31-year-old farmer who lives about 100 metres from the mine, was accidentally shot in the abdomen in 2009 while walking on a nearby road as police were chasing a group of invaders. His house has been relocated twice in the past dozen years as the mine expanded. He says the blasting at the mine wakes him up at night, and the dust leaves him coughing and exhausted.

The displaced families were given compensation, but those who were relocated in the 1990s were paid less because of a socialist-era law that deemed all land to be owned by the state. The families were compensated only for their buildings and crops; they never received the full market value of their homes. “The process suffers from a local perception of inadequate compensation for previous resettlement,” African Barrick acknowledged in its prospectus.

Privately, some company officials go further. The early payments were “peanuts,” one official acknowledged.

“The mine is a salutary lesson in how not to establish a mine within or near to an existing community,” said a report last year by the South African Institute of International Affairs, an independent think tank affiliated with the University of the Witwatersrand and funded by the United Nations. The institute’s researcher was given access to Barrick’s four Tanzanian mines, and Barrick made management available for interviews. “There is constant and persistent anecdotal evidence that the way in which the mine was established was neither transparent, nor did it secure the support of the local community,” the report said. “Moreover, there are repeated reports from people involved in mining and community development work in the area over many years that the community feels duped and deceived by the way in which the mine was established.”

The report says Barrick inherited a “perfect storm” of problems when it acquired North Mara in 2006 as part of the Placer Dome purchase. But it notes that those problems were compounded by Barrick’s own mistakes, including a much-publicized spill of acidic water from the mine’s storage ponds in 2009. The report concluded that Barrick may have a legal licence to operate at North Mara but it lacks a “social licence.” In other words, it has failed to win the support of the local community, a crucial requirement for any mining company these days.

What’s more, the report said, “The company has acknowledged that not only does it not enjoy a social licence to operate the North Mara mine, but that the very viability of the mine is under threat.”

If someone at Barrick hinted to the institute’s researchers that the company might abandon North Mara, the company now insists it is fully committed to it. “We think shutting down a mine that provides employment and other meaningful benefits to thousands is not a good solution,” Barrick president Aaron Regent wrote on The Globe and Mail website recently. (Read Mr. Regent’s column: Barrick Gold and North Mara: the search for common ground)

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/rob-magazine/barrick-golds-tanzanian-headache/article2183592/page3/

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