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BARRICK GOLD CORPORATION - TANZANIA
SYNOPSIS
The case examines a Canadian mining corporation, Barrick Gold Corporation (Barrick), whose business in
Tanzania has been called African Barrick Gold plc (ABG) since 2009, and the way it engages in
sustainable community development surrounding its mining activities in Tanzania. Following recent
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1. To illustrate the rationale of global TNCs in seeking social licence and local legitimacy in local
communities and to understand how they achieve these.
2. To help students understand how international activists and affected communities are shaping the
behaviour and business strategies of global TNCs in subsidiary business operations.
The company is aware of how the influence of social actors, civil society institutions, human rights groups,
and other watchdog activists can impact its business operations. Such groups are becoming more global
3. To help students understand the relevance of hybrid institutional infrastructures.
These incorporate a bottom-up (e.g. empowerment and pro-poor practices), inclusive partnership approach
with local communities that advocates a win-win scenario, and strategies that promote sustainable peace-
4. To help students develop an understanding of the path, motivations, challenges and opportunities faced
by global TNCs in partnership with local stakeholders in foreign subsidiaries.
The TNCs’ paths include the transnational model of global strategy that emphasizes global efficiency,
national responsiveness and worldwide learning capabilities. Some TNC motives include gaining
reputational capital; trust from local stakeholders; knowledge of local social problems and needs; increased
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TEACHING OVERVIEW
The case is suitable for core and elective courses in international business/management, strategy and
sustainability and for elective courses in not-for-profit management, global corporations and society, and
international development and sustainable value creation.
1. Despite Barrick’s efforts in the Lake Victoria Zone, protests, tension and violence had not abated by
early 2009. What are the major alternatives for Barrick?
2. What are the challenges faced by extractive mining corporations in their attempt to establish subsidiary
operations in developing nations?
1. Despite Barrick’s efforts in the Lake Victoria Zone, protests, tension and violence had not
abated by early 2009. What are the major alternatives for Barrick?
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(1) “Peter Munk in his own words: speech at the 2010 Barrick AGM,” with an overlay of anti-Barrick
(2) Toronto Tanzania Solidarity.
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At a minimum, viewing one or more of the videos will at least initially raise the temperature in the
classroom discussion. Our emphasis over the balance of the class session will be to replace some of the
heat with light.
2. What are the challenges faced by extractive mining corporations in their attempt to establish
subsidiary operations in developing nations?
During the post-colonial and Cold War eras of the 1970s and early 1980s, national governments and their
citizens in several developing countries (especially those that followed the Russian command institutional
and economic system such as Tanzania) were often opposed to TNCs’ entry and their business activities.
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The advent of globalization forces, the effects of technology, the liberalization of national, institutional and
business de-regulations, and improvement of the investment climate in developing nations provided a raft
of incentives for TNCs, such as extractive mining corporations, to increase their commercial activities.
However, as globalization and TNCs’ influence in developing countries continued, the acceptance of neo-
liberal economic policies and the opposition to TNCs’ activities shifted from the host countries to local
communities, sub-culture groups (e.g. indigenous groups), and social activists (e.g. NFOs). Nation states
governance policies were weak in serving the interests of their citizens on social issues (e.g. healthcare,
primary education, sanitation, jobs, security, and gender equality). Economic profits generated by TNCs
and other private businesses were diverted, creating institutional corruption, political irresponsibility and
Local communities are stakeholders directly or indirectly affected by TNCs’ business activities. They are
one of the new battlegrounds on which TNCs’ activities are contested. This trend has enormous financial
and reputational consequences for TNCs. Local communities include communities of place — based on
As mining TNCs have become increasingly globalized, opposition to them from various types of
community groups has likewise become more globalized. Joint collaborations among social movements
and lobbyists from developed nations and those in developing countries have shown a strong propensity to
In adopting sustainable development programs and responding to concerns about sustainable development,
mining TNCs have acknowledged that they are responding to social pressure and that such responses are
no longer optional. Increasingly, mining TNCs have publicly proclaimed their financial and corporate
In order to address the challenges faced by extractive mining TNCs across developing nations, community
needs and resources need to be fully integrated with the TNCs’ core strategic decision-making processes.
than relying on a single organization or a few individuals to address these social and ecological problems.
At a transitional level, TNCs can develop an engagement strategy based on two-way communication,
consultation and collaboration with affected communities. More importantly, TNCs need to develop
Transformational engagement requires the competency to engage participants through listening and an
understanding of their culture (and sub-cultures), perception and context; through the creation of a shared
While the above solutions highlight the positive contributions which TNCs might undertake to legitimize
their activities and acquire license to operate abroad, there are challenges that can force them to exit certain
countries or even derail them from implementing preferred sustainable development practices. For
example:
Overall, global TNCs need to continue to balance their global and local interests by re-examining and re-
structuring their corporate business culture in order to accommodate key issues that legitimize and license
3. Why and how has Barrick adopted a global approach to address corporate social
responsibility issues in Tanzania?
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Barrick attempts to balance between its internal and external (global competitiveness and responsiveness)
challenges. Its global CSR policies
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are directed specifically at efforts to a) confront the traditionally
negative reputation of the mining industry in developing nations and b) contribute to the global transition
In an effort to gain local legitimacy in Tanzania, the company works with the communities that surround
its mining sites near Lake Victoria to determine and develop key infrastructure needs. Barrick’s area of
focus lies in the field of global best CSR practices, which encompasses ethics and good governance in
managing human resources, occupational health and safety (including HIV/AIDS), labour practices,
Despite the above engagement efforts by Barrick, conflict continues with communities of place, in
particular those within close proximity (i.e. fence-line communities) to its operations. Based on case
Exhibit 1, Barrick’s global social efforts have not created a win-win scenario. Some might go so far as to
argue that this intensifies the vicious cycle of poverty, conflict and violent behaviour among fence-line
communities:
There is a failure by Barrick’s global CSR activities to realize a competitive win-win scenario with various
communities in the Lake Victoria Zone (see case Exhibit 1). As guided by the head office, Barrick treats its
global CSR practices as homogeneous across all communities, including building, health, education and
infrastructure. While these services are important within Tanzania, Barrick does not instill development
There is no systematic conflict reported from communities on the western part of the Lake Victoria Zone,
for example, in Tulawaka, Buzigwa and Bulyanhulu in Kahama District. The persistent conflicts are on the
eastern part of the Lake Victoria Zone, in North Mara (i.e. Musoma and Tarime Districts). The latter
The mining activities in fence-line communities have further exacerbated the situation and areas for
livestock grazing have been taken away from these communities by Barrick’s extractive mining
activities.
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The government’s promises to compensate various communities have been too little or late to
provide a decent sustainable livelihood for those affected. The main issues facing the pastoralists’ way of
Thus, the acts of CSR designed to address stakeholders’ issues seem inadequate for the firm in a Tanzanian
context. Despite the financial resources given by Barrick to Lake Victoria communities and to North Mara
in particular (see case Exhibits 2 and 3), Barrick is too far removed from the local communities to draw the
connection between building public services and addressing the lifestyle of pastoralists, drought, poverty,
4. Can tax revenues, rents and subsidies effectively be utilized by Tanzania (and other
developing nations with mineral wealth) to generate prosperity in the densely populated area
of the Lake Victoria Zone to break the so-called “resource curse”? How?
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Thus, it becomes essential to generate public revenue through a transparent tax and budget system to build
an economy that will bring about social development. Generally, tax revenue has four main functions in a
society. It allows a government to:
Linking Barrick’s mining activities to the local community in the Lake Victoria Zone and to the wider
economic development in the country, the revenue collected can become a key instrument through which
the government uses the mining industry as a tool for development in the area.
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As a country that claims to
More transparent tax structures can help Tanzania to build “state-citizen” accountability. Mining subsidies,
rents and tax revenues can be utilized to create demand for small, local enterprises that serve communities
of place, for example. Local fishermen who have lost their regular source of employment can be supported
Barrick operates its mining activities in the remote and economically depressed community areas around
Lake Victoria, an area that the government has neglected for many years. Barrick and the government
could strive to build a pro-active cross-sector social partnership strategy with the communities in order to
• cooperative organizations in farming, cattle raising, and fishing that would eventually open new
employment opportunities for local communities;
• equipping social services (education and health) by using local talent and resources to generate much-
Failure by the Tanzanian government leadership will continue to fuel tension and violent behaviour by
local communities against Barrick.
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Given its global presence in extractive mining activities, Barrick
5. Despite Barrick’s efforts in the Lake Victoria Zone, protests, tensions and violence had not
abated by early 2009. Why? What can Barrick do?
Tanzania joined NEPAD, AMP and the UN Economic Commission for Africa (UNECA) in 2002 with the
aim of acquiring “best practice” guidelines for the government, and to ensure that mining laws were in
place that would protect the environment and communities around the mining sites while also maximizing
Tanzanian institutional governance capabilities, corrupt behaviour by some individual government
officials, weak legal systems for handling corporate revenues and other remittances, and various
stakeholders’ ambiguities, are the main sources of the problem, hence the so-called “the mineral resource
had lease areas swamped by locals before projects have truly taken off. The invading locals are unhappy at
the perceived irregularities in their resettlement or in the allocation of mining licences and compensation.
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On several occasions, Barrick has opted to do business with committed NFOs, groups, individuals and
artisans in order to build social relationships in the communities around its operations rather than relying
on government institutions.
tool to both motivate youth combatants and sustain their participation in the struggle. For poor
communities, poverty could be seen as a grievance that legitimizes their struggle; once the conflict has
endured and has provided both sustenance and power to community combatants, fighting becomes a viable
alternative to living in poverty.
WHAT CAN BARRICK DO?
Given the local communities’ negative perception of global mining TNCs in developing nations like
Tanzania, engaging local stakeholders (i.e. peace through commerce) in a way that appeals to their social
needs remains essential to the success of any sustainable community initiative (see case Exhibit 1).
a) Utilize local community-centric values that are predominant among local people in Tanzania.
Such values promote relational dialogue, conflict resolution and shared understanding, and develop
culturally appropriate forms of community engagement with businesses; also, utilizing such values is
b) Identify committed local groups/communities and employees who are committed to fostering local
skills and innovation.
Then, deploy simple managerial know-how and technologies that are suitable for the ecological and social
in this situation so that communities can more easily learn and emulate new ways of dealing with social
challenges. In doing so, such local groups would create local knowledge and a product base to serve local
markets, and would subsequently create employment opportunities in communities and bring economic
c) Avoid too much dependence on short-term security focuses, such as the use of the local Field Force
Unit (FFU) and government institutions to work in social partnership with local communities.
The policy of business involvement with political affairs in a weak institutional governance system to
engage local communities will only serve to prolong the tension and conflict with local communities in the
d) Develop a global-local stakeholder management approach based on a new organizational structure and
cross-cultural values,.
The head office in Toronto could empower its sub-unit TNC operations by developing organizational
capabilities that promote competitive advantage through poverty alleviation practices, including the
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One element of cross cultural values is the use of language that can be clearly understood by local
stakeholders. For example, instead of translating Barrick statements directly into Swahili (a lingua-phone
language spoken in Tanzania), it needs to modify some of its language and vocabulary so that it can create
local meanings and relationships that emphasize social collectiveness and relational perspectives. This is
e) Engage in alliance and acquisition relations with local or international firms to acquire dynamic
capabilities to address the social issues in the Lake Victoria Zone.
TNCs’ managers are often ill-prepared to deal with the idiosyncratic and context-specific nature of
stakeholder demands. Barrick and other TNCs must continue to revisit, and if necessary reformulate, their
cross-sector social partnership strategies with subsidiary stakeholders if they are to acquire social license
Embracing such sustainable capabilities can potentially turn mere collaboration into a substantive
transformational community engagement process. TNCs must continue to develop appealing market
environments that match conditions in local communities. Barrick’s head office could develop an
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SUPPLEMENTARY READINGS
Supplementary Textbooks and Websites
This chapter clarifies the roles of TNCs in addressing social issues within a sustainable development
framework. These have evolved from traditional exploitative and transactional approaches to responsive
and transformative engagement approaches in subsidiary business operations.
Basic Books, New York, 2000.
These books can help students understand i) the nature of institutional capacities, informal market systems,
legal and regulatory mechanisms, and the community engagement and leadership within an African
context that TNCs require in the process of cross-sector social partnership implementation; and ii) the role
Some Relevant Readings — Theoretical Grounding
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Exhibit TN-1
CURRENT BARRICK GOLD CORP
CORPORATE SOCIAL RESPONSIBILITY POLICIES IN TANZANIA
resettlement that may be necessary. It strives to contribute to the sustainable economic development of the
host communities through procurement activities, assistance in the establishment and growth of small to
medium-sized sustainable enterprises, and the outsourcing of goods and services from local vendors where
appropriate.
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Exhibit TN-2
BREAKING THE MINERAL CURSE: HOW TO INCREASE REVENUE AND TRANSPARENCY
Tax revenues and royalties:
The government must eliminate the use of secret mining contracts that grant mining TNCs tax exemptions.
It should increase its taxes collected from mining TNCs in a transparent manner.
Revenues generated to benefit communities as well as heightened corruption in the country are issues that
must be addressed openly by the government, which should engage stakeholders in the whole process.
Confidentiality clauses in mining agreements should be made public. Tanzania should adhere to its charter
of freedom of information that it introduced in 1997 so that citizens can access information.
Transparent mining TNC reporting:
In Africa, most mining investment is undertaken by the subsidiaries of TNCs incorporated in South Africa,
Canada, the United States, Australia or Europe, and listed on one or several international stock exchanges
and indexes. The company laws and stock exchanges in these countries require them to publish their
Several international social activists and civil campaigning groups such as the Open Society Institute of
Southern Africa in Johannesburg, Third World Network Africa in Accra, Tax Justice Network Africa in
Nairobi, Action Aid International in Johannesburg, the Extractive Industries Transparency Initiative in
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Exhibit TN-2 (continued)
Tanzania must join the Extractive Industries Transparency Initiative (EITI), which was initiated by the
U.K. government in 2002 after campaigns by civil society organizations with the aim to partly resolve tax
revenues in poor nations. Membership to EITI requires governments to put their own accounting in order
Roles of NEPAD, African Union (AU) and SADC to address the “mineral curse” constructively:
African political leaders themselves, through NEPAD, AU and SADC’s African Mining Partnership,
should work collaboratively with mining TNCs and NFOs to turn Africa’s mineral riches into a force for
Role of bilateral and multilateral donors to poor nations:
Multilateral donors should increase their financial, logistical and technical assistance to African
governments to improve their capacity to monitor and audit the accounts of mining TNCs and review their
In partnership with Barrick, TNCs operating around the Lake Victoria Zone, NFOs, and local
communities, the government must ensure that it puts policies and practices in place that tackle the state of
