Special Report December 23, 2010, 1:05AM EST

Shooting Gold Diggers at African Mine Seen Amid Record Prices

Security guards and federal police have allegedly shot and killed people scavenging the waste rock at Barrick Gold's North Mara mine in Tanzania

(Bloomberg) -- Barrick Gold Corp.'s North Mara mine near the Tanzanian border with Kenya disgorges millions of pounds of waste rock each week, piled high around communities where almost half the people live on less than 33 cents a day.

Children in school uniforms scurry across the rubble to reach their classes. Women with water pails atop their heads skirt past the heaps. The piles grow as the longest bull market for gold in at least 90 years pushes Barrick, the world's largest miner of the precious metal, to increase production.

Villagers, too, are hunting the ore on the North Mara land that their ancestors worked for decades, sometimes paying with their lives.

Security guards and federal police allegedly have shot and killed people scavenging the gold-laced rocks to sell for small amounts of cash, according to interviews with 28 people, including victims' relatives, witnesses, local officials and human-rights workers.

"They are not arresting them or taking them to court," said Machage Bartholomew Machage, a member of the Tarime District Council, the highest local government body. "They are just shooting them."

At least seven people have been killed in clashes with security forces at the mine in the past two years, according to the 28 people interviewed. In at least four cases, police acknowledged the shootings in contemporaneous press accounts.

Killed and Wounded

The dead include Mwita Werema, a father of four who was killed one day after gold set another record price in October 2009; Chacha Nyamakono, who was one year from becoming the first in his family to complete a basic education; and Daudi Nyagabure, shot in February, who was eager to build a future for his pregnant wife.

Fifteen people were seriously wounded in the same period, according to the Legal and Human Rights Center, a human-rights group in the Tanzanian city of Dar es Salaam, and Machage, who was the district council vice chairman until August.

Toronto-based Barrick and African Barrick Gold Plc, which is 74 percent-owned by the Canadian miner, pay the Tanzanian government for federal police protection at the mine and employ private armed guards, according to company documents.

The violence at North Mara is a brutal dividend of gold prices that have risen almost threefold in the past five years to a record $1,431.25 on Dec. 7.

In written responses to questions about the situation, African Barrick said it frequently faces groups of intruders, often armed, who illegally enter the North Mara mine with the intent of stealing valuable ore.

Mine Trespassers

It also said some thefts, vandalism and other incidents are the result of organized crime, in part stoked by transients in the border region with Kenya.

People killed or injured after crossing into the mine area shouldn't be considered small-scale miners because they were all trespassing and therefore acting illegally, said Andrew Wray, head of investor relations for African Barrick, in a Dec. 21 written response to questions.

"ABG categorically refutes any claim that any persons injured or killed were artisanal or small scale miners," he wrote.

He declined to comment on specific cases, citing active or potential police investigations, except for one. He said allegations that mine security inflicted lethal injuries in that instance are "fundamentally untrue." They were the result of a fight between intruders over stolen ore, he wrote.

Security Improves

Security incidents at the mine have "significantly declined" during the past two years despite record gold prices, Wray said. The company declined to comment on the number of people killed or injured by security forces in the past two years.

Barrick didn't respond to written questions about North Mara, instead directing them to African Barrick. The Canadian company raised 581 million pounds, the equivalent of $872 million at the time, from the March 19 initial public offering in London of African Barrick.

Aloyce Tesha, a spokesman for Tanzania's Ministry of Energy and Minerals, which oversees mining, declined to comment when presented with a list of the alleged killings at the mine. In an e-mail, he said the issues involved criminal investigations and referred questions to the police. Calls to the Inspector General of Police and the office of Tanzanian President Jakaya Kikwete were not returned.