Tanzania Energy Profile 2012

Barrick To Spin Off Tanzanian Operations

In February 2010, Barrick announced plans to spin off its Tanzanian operations into a separate company, African Barrick Gold (ABG). A 25% stake in ABG will then be listed via an IPO in London, with a possible secondary listing in Dar-es-Salaam at a later stage. Barrick will hold the remainder of the company’s equity. The IPO is expected to raise some US$1bn, which Barrick will use to fund new projects.

ABG’s key assets are four mines in north west Tanzania, which together produced some 716,000oz in 2009, accounting for just under 10% of Barrick’s total gold output in that year. In 2009, Barrick’s African operations made EBITDA of US$249.5mn on revenues of US$693.4mn, according to the Financial Times. The Tanzanian government has already indicated that it may purchase shares in ABG and has also indicated that Tanzanian nationals may be eligible to participate in the IPO, according to local media reports.

Country Overview

The Tanzanian mining industry is relatively small in terms of value, but its importance is highlighted by the fact that mining earns a substantially significant share of the export revenues for the country. The mining sector contributes approximately 2.3% to annual GDP but the government wishes to expand this to 10% by 2025.

Traditionally, gold and diamond production has been the mainstay of mining production for the country. It is the fourth largest gold producer in Africa, behind South Africa, Ghana and Mali, and ranks among the top producers of diamonds in the world. Another metal that has been catching the spotlight is uranium, with a significant number of deposits being identified in Tanzania. Coloured gemstones are also mined extensively in the country.

Industry Forecast

Tanzania’s mineral industry, particularly gold mining, is likely to grow in the near future, with increased production from the North Mara mine and the development of projects such as Buckreef and Tulawaka. Coal and uranium prospecting is also continuing around the country, with a high likelihood of some of these projects becoming productive over the coming years. As a result, we forecast steady growth for the Tanzanian mining sector as a proportion of GDP over the next five years, with risks to the upside if new projects come onstream on schedule.

Mining Report Q4 2009
Mining Report Q4 2010