Advancing Together With Barrick Gold

Mining Buzwagi in profile

Barrick Gold’s Buzwagi project in northern Tanzania is challenging negative and outdated perceptions about foreign mining companies in Africa. Even before the first ounce of gold has been poured, the project is shaping up to be a compelling example of a responsible mining company striving to get it right when setting up a large-scale operation in Tanzania.

Located south of Lake Victoria in the Kahama District, the $400 million project is expected to produce about 200,000 ounces of gold in 2009. The project has an estimated mine life of over 10 years. Buzwagi is Barrick Gold’s most advanced project with production commencing in the second quarter of 2009. It will be the second largest mining venture in the country, providing jobs for about 700 primarily Tanzanian employees.

The mine will make major investments and expenditures in Tanzania. Over the life of the mine, Barrick Gold will pay nearly $300 million in royalties and taxes, and an additional $100 million in payroll. Another $600 million will be spent on power supply and goods and services in Tanzania.

The property was acquired in 1999 and by the time the project feasibility study was completed in 2006, the original ore body had essentially doubled in size. Today, over 90 per cent of the site construction work has been completed. A crew of 3,000 have been employed for the past 18 months to get the project to this fi nal stage, making it the largest construction project currently underway in Tanzania.

The crew includes a small army of engineers, project managers, construction workers and haul truck operators. The 12,000-ton-per-day process plant facilities, giant leach tanks and mining fleet workshops are now in place, with only the final electrical, mechanical and piping work remaining.

Anthony (pictured) is the former general manager at Tulawaka, one of four Barrick Gold properties in the country’s Lake Zone region. In 2001, he became a member of the process team at Bulyanhulu, a mine also located in the Kahama District.

Anthony’s capable, no-nonsense style is in-synch with the project’s strong leadership team, who bring nearly 80 years of combined senior management experience in Tanzania. Together, they are delivering the project on time and on budget.

Manager of Community & Site Services is Brian Whiteley, an outgoing 41-yearold raised in Africa with an intimate understanding of how things work and how to talk to people. While everyone on the Buzwagi team has a hand in community relations, Whiteley was the project manager on the resettlement program.

Resettlement of people living in future mining areas can be one of the most sensitive aspects of a new mining operation. As with all Barrick Gold properties where resettlement is required, the program followed International Finance Corporation “best practice” standards, including extensive community consultation.

Describing the process, Anthony states: “We never broke trust with our neighbors. We gave a reasonable premium to fair market value. Th ey saw that we are not corruptible, that there are checks and balances in place to demonstrate that we are transparent on all monetary transactions.”

For months on end, Whiteley would get up early in the morning, jump in his Land Cruiser and visit people wherever it suited them. Sometimes that meant holding a meeting sitting under a mango tree or in the back of his truck.

“When we had an agreement, several village leaders were also asked to sign and witness the agreement,” Whiteley says.

It was a long process, but once the ink had dried, 540 agreements had been struck, each one consistent with the last. In total, 220 households were relocated and another 320 landholders – people who live elsewhere but owned land in relocation areas – were fully compensated.

“We weren’t prepared to go ahead with the project with any community negativity,” says Anthony. “We didn’t want to hear four or five years down the road someone saying, ‘Look what Barrick did to me. They forced me out of my house and I’m now living on the street.’ ”

Rather than handing over funds, Barrick Gold provided significantly upgraded replacement homes and added a bonus acre of land for each household. Residents chose the land and where their new home and cooking house would be located. Similarly, replacement land was purchased of equal or greater value.

For people living in the immediate area surrounding the Buzwagi project, resettlement presented some distinct advantages. A typical rural house in the area is valued at between $200 and $400 and consists of a mud floor, mud brick walls, a thatched roof and windows covered with sheets rather than glass.

Barrick Gold hired local workers to build new houses valued at between $8,000 and $12,000. The homes feature concrete floors and brick walls, proper sanitation facilities, a tin roof and a separate cooking house. Nagile Magelele Kwikwega and her grown son and daughter were one of the households to relocate. “I am happy with my new house and facilities,” she said. “With the compensation I received from the mine, I bought a bicycle and a mobile phone. On my free acre of land, I am growing maize and ground nuts.”

Even the bricks for the homes were manufactured locally, generating wages that would have otherwise been paid to contractors outside the community.

In September 2007, Tanzanian President Jakaya Kikwete toured resettled areas and praised the company’s eff orts. “I have not seen a relocation project as successful as this,” he said. He called the resettlement program “an outstanding plan that needs to be emulated by others. It surpasses our practices of compensation and relocation and it sets a new benchmark.”

The next challenge for Buzwagi was securing a reliable source of fresh water. There is no existing water infrastructure in the region and precipitation is largely confined to the rainy season.

Barrick Gold found the answer in an innovative design feature that is a first for the mining industry in Tanzania and beyond.

Buzwagi constructed a rainwater harvester, massive in scale and audacious in concept. The 75-hectare water harvest area is essentially a giant, lined bowl that will capture rainfall and channel it into a covered reservoir that holds 1.5 million cubic meters of water.

Buzwagi receives one meter of annual rainfall, which means the harvest area should have no problems supplying the process plant with adequate water resources. The water harvest area itself accounts for five per cent of the total surface area of the project. However, the entire mine site has been designed to collect and store as much water as possible.

Capturing rainwater for use in processing also means the mine won’t have to tap into the area’s groundwater resources.

One of the standout investments made by the mine to date is a program to install and upgrade water wells. Initiated in 2007, the company worked in consultation with local village leaders to identify areas that needed well construction or upgrading. The goal was to provide both newly constructed homes and the surrounding communities with easy access to clean water – a convenience many residents had never known.

Construction of the water wells began in May 2007 and the project relied completely on unskilled labour from the three nearby villages. Those who had been relocated from homes equipped with an existing well were both compensated monetarily and received a new well at their new residence. By April 2008, 67 concrete wells were excavated, bringing clean, accessible water to more than 2,500 people in the area.

The Kahama District is home to more than 700,000 people living in 221 villages, the largest of which is the town of Kahama itself. A bustling town, Kahama is the lifeline for the local district and holds the region’s two seats of government. But like many places in Tanzania, the town is power-starved. Kahama’s existing one megawatt power source provides enough power for a town of 10,000 – nowhere near enough to handle the demand placed on it by the town’s 70,000 residents.

In order to provide a stable power source for Buzwagi, Barrick Gold has plans to enter into a joint venture with TANESCO, Tanzania’s national power utility, to increase supply to Kahama seven-fold. The $8 million project is expected to be completed in 18 months.

The new 30 megawatt power supply system includes a 107 kilometer power line from the Shinyanga area. The power line will provide reliable power of acceptable quality for the mine and the town of Kahama, which will see its power needs met by a steady supply for the first time.

A District Consultative Committee, made up of heads of government departments in Kahama, is helping Barrick Gold make decisions on which sustainable community projects will most benefit the area. Initiatives in education, health and local procurement are well underway. Infrastructure upgrades include roads leading into some of the villages.

Perhaps one of Buzwagi’s greatest legacies to date is the construction of the new Ishinabulandi Primary School, which features 12 furnished classrooms and housing for 11 teachers. The original school had to be partially relocated to make room for the new power line, but Barrick Gold went far beyond the government-mandated necessities, investing $600,000 to build a vastly improved learning environment for children. Beyond the essentials, the school features a new playground, soccer field, orange grove and electricity.

Next on the horizon is the Mwendakulima secondary school. Now under construction, it will be the first high school with boarding facilities in the district.

A health program for the Shinyanga area is being developed with local authorities and advances are being made now to improve services. Barrick Gold medical staff and ambulatory vehicles are providing emergency services and paramedic assistance — something previously unavailable to the area. To date this year, personnel have responded to 21 medical emergencies. Recently, logistical support was provided by the company to health offi cials for a four-day immunization program targeting children under fi ve. And in the future, a medical centre will be established to serve the wider community, featuring a medical dispensary and clinic for counseling on HIV/AIDS and other serious illnesses.

At Buzwagi, Barrick Gold’s “buy local” procurement policy is in effect. Goods and services such as uniforms, furniture, agricultural products and environmental services are being purchased from local providers, stimulating the economies of these communities.

Meanwhile, on a six-acre farm near Mwedakulima, Whiteley and a local farmer are examining the latest crop of ripe tomatoes. There is satisfaction in knowing this community farm, a longterm sustainability project, is giving farmers more opportunities to sell what they grow.

Currently, farmers around the project grow crops such as ground nuts, rice, cassava and beans. But at the cooperative farm, Whiteley and an agricultural expert are teaching them to expand on their produce to include watermelons, potatoes, carrots, tomatoes, bananas, onions and other items.

“This farm is teaching people to grow crops that we can then use to feed our employees at the mine,” Whitely said. “This initiative meets both our need for this produce and the needs of farmers to make a good income.”

For Whitely and Anthony, there is deep satisfaction in knowing Buzwagi is about to begin operation on such a solid footing. If the first last 18 months are any indication, the next 15 years hold great promise.