Summary
– Mining executives and employees have been detained on three occasions by the Malian government since September, organizations have had to pay hundreds of millions of dollars in return for their release.
– The operating environment in the Central Sahel has changed significantly in recent years, with military regimes now leading Mali, Burkina Faso, and Niger.
– Significant changes have also been made to the mining codes of each state, often to the detriment of organizations who have been working in the region for decades.
– Western mining entities have found themselves increasingly caught in the middle of major geopolitical shifts taking place in the Sahel, a trend that is likely to continue over the coming years.
Event Overview
On 26 November, four of Barrick Gold’s employees were detained in Mali. This was the third incident of this type in months, with four employees of the Canadian company having been detained in late September. On the first occasion, the Malian government alleged that Barrick had committed financial crimes and had “not honoured its commitments made under an agreement designed to achieve a more equitable distribution of mineral resource exploitation to the benefit of all stakeholders.”
The employees were released by Malian authorities in October, after the government and Barrick agreed a negotiation framework to resolve their disputes. A payment of FCFA 50 billion ($85 million) to “act in good faith as a long-standing partner of Mali”, alongside a pledge to increase the government’s share of profits from the Loulo-Gounkoto gold mine, secured their freedom.
Talks between Barrick and the Malian government took place throughout October. On 14 October, Barrick’s CEO put forward a 225 billion CFA franc ($371 million) financial settlement and the finalization of a memorandum of understanding relating to Barrick subsidiary Société des Mines de Loulo’s operational permit. However, a letter sent by Malian Finance Minister Alousseni Sanou to Barrick on 18 October threatened to retake the Loulo mine concession when its permit expires in 2026, indicating a significant difference of opinion between the two parties.
The turbulent relationship between Barrick and the Malian junta was again demonstrated by the arrest of the four previously detained employees at the Loulo-Gounkoto complex on 25 November. The political leadership in Bamako are now reportedly seeking approximately 331 billion CFA franc ($500 million) in unpaid taxes. Barrick has responded in a statement that while it disagrees with the charges, “it would continue to engage with the Malian government to find an amicable dispute settlement that would ensure the long-term sustainability of the complex”. At the time of writing, the four employees remain under arrest in Mali.
The ongoing dispute with Barrick and the use of arbitrary detentions is not an isolated case, potentially indicating a new modus operandi for the Malian government. Indeed, on 9 November, the chief executive of Resolute Mining and two members of management were detained in Bamako due to alleged tax irregularities. Despite denying the allegations, the trio were released on 21 November after Resolute agreed to pay approximately 99 billion CFA franc ($160 million).
Impact
The Malian mining sector has undergone significant changes since Assimi Goita seized power in 2021, the most significant of which was the reformed mining code introduced in 2023. The updated version of this legislation stipulated that state ownership would rise from 20% to 35% and that operators would pay an increased amount of taxes. This development also saw the government announce that it would be conducting an audit of existing contracts, including the possibility of recovering unpaid taxes.
The government is currently under sanctions by the West for seizing power via a military coup, they have also been cut off from aid. Dwindling finances, exacerbated by an overall lack of foreign investment and poor economic growth due to high levels of insecurity, are believed to have motivated this recent campaign by the Goita administration. The details of negotiations between the government and two mining operators remain unclear, though other companies operating in Mali such as B2Gold and Allied Gold have agreed to the terms of the new mining code and are yet to be impacted by arrests.
The economic impact of these unprecedented detentions was felt by both Barrick and Resolute. Shortly after the first detention of the Barrick employees, shares dropped by 2%, while the second instance saw them fall by 7%. But for Resolute Mining, the repercussions were far more severe, with its shares dropping by 32% on what was its worst trading day in 16 years.
Assessment & Outlook
At the time of writing, Mali is the only state in the Central Sahel to have used arbitrary detentions against foreign mining entities. But like Mali, the juntas in Burkina Faso and Niger have also made sweeping adjustments to their mining codes. Burkina Faso also nationalized at least two gold mines, while Niger temporarily halted the issuance of new mining licences for over six months and revoked at least two uranium mining licenses – including at one of the world’s largest concessions. More recently, Burkinabé leader Ibrahim Traoré announced his country would be withdrawing mining permits from foreign companies over the coming months.
While each country in the Central Sahel holds its own differing conditions, the exceptionally similar methods the juntas have deployed to extract more profit from their natural resources alongside their growing ties means that coercive tactics recently seen in Mali may be replicated elsewhere. The post-coup environments in these countries have also impacted operators by leading to increased levels of violence and insecurity; organizations have also had to overcome new obstacles stemming from the ongoing withdrawal of the three countries from ECOWAS. For instance, a company involved in Uranium mining in Niger was forced to suspend operations this October due to the closure of the Benin-Niger border, which has been largely closed since the coup in July 2023. Moreover, a list of operators have left Burkina Faso since its two military coups.
Amid the increasing pressures facing foreign mining entities who have been operating in the region for decades, investing billions during this time, Russian organizations have been invited to expand their footprint in the Central Sahel. Some believe that these new tactics are designed to extract maximum profits from Western mining companies and force them to withdraw so that these states can partner with Russia; there has been significant speculation that Moscow is seeking to takeover Barrick’s Loulo-Gounkoto complex. Consequently, the coming months and years will likely see coercive tactics deployed with increasing frequency against mining companies in the Sahel, potentially to the point in which the costs outweigh the benefits of remaining in the region.
For further information on this topic and potential security risks, please contact our team.