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Barrick, Rangold US $5.4Bn deal faces its first hurdle

Barrick Gold Rangold’s US $5.4Bn deal is currently faces its first hurdle. Among the assets Barrick is to acquire in the deal is Kibali, a mine that Rangold’s CEO Mark Bristow has seen from the ground up in the Democratic Republic of Congo.

Meanwhile Sokimo, Randgold’s state-owned partner in Kibali, has protested that it was not informed of the deal in advance and said it would “assert its rights”.

On the other hand, Barrick will not be the first company to be squeezed by an increasingly assertive government in Kinshasa. Earlier on this year, Glencore paid US $150m for purposes of settling a dispute with state-owned Gecamines. According to media reports, the latter had used identical resource-nationalist language as Sokimo when objecting to Freeport-McMoRan’s plan to sell a copper and cobalt mine to Chinese buyers. As such, Freeport is said to have paid Gecamines US $100m to smooth the transaction.

Another instance is seen when Bristow came away empty-handed after leading fellow CEOs in lobbying for concessions on the DRC’s new mining code. Bristow has since come forward and asserted that the DRC government cannot block the transaction citing adherence to proper legislation procedure on their part.

According to Bristow, comparisons with Freeport are misleading as the US Company was exiting the DRC as part of its deal. He further clarified that they are proposing an entirely different transaction, in which there will not be a change of control for Kibali.

However, Bristow’s statement has not stopped DRC mining minister Martin Kabwelulu from invoking the nation’s new law, which decrees any takeover at a mine requires government approval. This is to mean that the proposed merger “must obtain the prior agreement of the Congolese state” to take effect at Kibali.

 

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