The Medina administration has signed an agreement with Barrick Gold that provides the government with increased gold mining revenue. Some earnings are conditioned the price of gold averages a high of US$1,600 per ounce. If gold prices remain at the record high, the government will receive around US$11.6 billion for the duration of the mining project, or around 51.3% of the gross profits, compared to 37.1% in the previous agreement. The Medina administration and Barrick signed the Second Amendment to the Special Contract for Mining Rights (CEAM) yesterday, Thursday 5 September. The agreement also re-incorporates the provision that the mining profits will be taxed. The Medina government is also installing an office at the DGII to audit financial statements presented by Barrick and other mining companies.
The amendment establishes that the government will not have to wait for the company to recoup its declared investment, but would receive US$1.28 billion in revenue for the duration of the Medina administration (from 2013 to 2016) if the price of gold remains at an average of US$1,600 ounce.
Dominican negotiators reduced the company’s declared investment of US$681.9 million, or 14.2% of its declared investment.
The company also agreed to make a retroactive payment of US$36.4 million on exports carried out from 13 November to 31 December 2012.
The company also agreed to pay US$73.1 million in income tax for the capital gains derived from the sales operation of the Placer Dome contract. This will be paid in the first semester of 2014.
The contract also includes a reduction in the depreciation from 40% to 15%. This means that the company shareholders would recover their investment by 2026 and not by 2016, as originally stipulated.
The contract also establishes a minimum alternative tax on exports of all metals made by the Pueblo Viejo mining company. The government says that this means the government can ensure it will receive US$10.67 billion in revenue from the contract, which is eight times more than in the contract negotiated by the Leonel Fernandez administration.
A provision that reduces the interest rate on loans that affiliates of Barrick grant to the Pueblo Viejo mining company is also incorporated.
The contract establishes that future capital investments need to be notified and justified to the Dominican government.
Upon signing the agreement, Presidency Minister Gustavo Montalvo said it was “a day for celebration for our country.” He guaranteed that every single peso would be invested in the people. With the signing of the agreement, he says the government ends the process that began on 27 February 2013 when President Danilo Medina announced the need for a greater share of the profits from the mining of Dominican gold. Revenue for the Medina administration could add up to US$2.2 billion, reports Diario Libre.
Barrick Dominicana president Manuel Rocha signed on behalf of the company. Industry and Commerce Minister Jose del Castillo Savinon, Presidency legal advisor Cesar Pina Toribio and Economy, Planning and Development Minister Temistocles Montas were also present.
From January to July this year, Barrick Gold exported 429,948.56 ounces of gold and 986,104.43 of silver, as reported in Hoy. The company began shipments last year. The mine made headlines when the government stopped several shipments at Las Americas International Airport accusing the company of irregularities in the exports, including irregularities in the amount of gold exported and origin of the shipment.
http://presidencia.gob.do/comunicados/acuerdo-final-entre-gobierno-y-barrick-incluye-m%C3%A1s-beneficios-para-el-estado
www.elcaribe.com.do/2013/09/05/estado-recibira-51.-3-ingresos-exportaciones-barrick
http://hoy.com.do/el-pais/2013/9/5/497263/Estado-logra-513-beneficios-del-oro-que-extraiga-la-Barrick-Gold