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Barrick Gold bristles at Mali’s new mining code

Mali’s military government is seeking to assert greater control over the lucrative sector

AfricaCanadian Business

Recent reports indicate that the relationship between Mali’s military government and Canadian mining companies are growing more strained, particularly around the investments of mining giant Barrick Gold.

Canada is a major player in the West African mining sector. In 2022, 98 Canadian mining companies operated across the entire continent of Africa, the total value of their assets sitting at $37 billion. When divided by region, West Africa forms the largest chunk of that pie at almost $14 billion.

Canadian investments in Mali make up almost half—$6.7 billion—of all Canadian mining assets in West Africa. This makes Mali the second most lucrative country in Africa for Canadian mining companies, after only Zambia.

The Government of Canada website notes: “Canada and Mali’s trade relationship is characterized by Canadian private sector investments in the mining sector… The combined Canadian private sector investments in Mali make Canada one of the top sources of investments in the country.”

The leading Canadian mining companies in Mali are Barrick Gold, B2Gold, and Endeavour Mining. These companies generate hundreds of millions of dollars in profit for their shareholders each year. By contrast, over 90 percent of the Malian population lives in poverty, according to the World Bank. Extreme poverty is also on the rise, going from 15.9 percent in 2021 to 19.1 percent in 2022. According to USAID, “nearly half of the highly dispersed population [lives] in extreme poverty.”

A number of military coups have occurred in West Africa in recent years, including in Guineau, Mali, Burkina Faso, and Niger. These military takeovers have been generally anti-Western in character, suffused with fiery anti-colonial rhetoric. Meanwhile, the US has seen its troops booted from Niger as the region’s leaders look for alternative military partners (namely Russia) who may be more effective at crushing the Islamist insurgencies in their countries.

Despite the bloody fighting in the region, Canadian companies remain heavily invested in West African minerals. However, recent moves by the government in Mali may give Canadian companies, and by extension Ottawa, cause to fret.

In August 2023, Mali adopted a new mining code that increased the state’s role in the sector. The code allows the state to take a 10 percent stake in mining projects with the option to purchase a further 20 percent within the first two years of production. The code also proposed that five percent be ceded to locals. Previously, Malian state and local interests took a 20 percent stake in new mining projects. With the new mining code, that number has risen to 35 percent.

According to Malian officials, the new mining code aims to add an additional US$803 million per year to state coffers.

By and large, Canadian mining companies did not criticize the Malian government as it pushed ahead with the new code, perhaps fearing the long-term security of their investments in the coup-prone region. However, a spokesperson for Barrick Gold noted that the new law represented a “difference of opinion” between the company and the government.

At the time, West Africa analyst Mucahid Durmaz predicted that “the change will likely encourage more state interventions such as demands for renegotiating mining contracts, introducing additional taxes, and temporary suspensions of mining projects.”

Later, the government of Mali audited the mining sector and announced that it would seek to recover hundreds of millions of dollars from investors in the industry. Barrick Gold rejected the audit’s findings as “legally and factually flawed and without merit.”

Tensions between Barrick and the Malian government keep rising. The Globe and Mail has reported that Mali may be seeking to expropriate the highly lucrative Loulo-Gounkoto gold mine, of which Barrick currently owns 80 percent.

According to Globe reporter Geoffrey York, “In earnings calls over the past eight months, Barrick chief executive officer Mark Bristow has repeatedly acknowledged that the company is facing unspecified ‘challenges’ in its Mali operations.” Bristow has visited Mali twice since late January to emphasize “the company’s huge contributions to state revenue.”

On May 1, the Globe published a report that Barrick is pushing back against “unspecified changes to the tax, financial and legal regime at its Loulo-Gounkoto mining operations.” These changes would increase the role of the state in Mali’s mining industry. According to the Globe, Bristow responded to Mali’s efforts with a warning: “Be careful you don’t compromise the benefits to Mali by taking too much….”

Bristow attributed the government’s efforts to assert control over the mining industry to the ignorance of Malians. In a conference call with analysts, Bristow said, “We’re dealing with people that are not particularly competent in the mining industry.”

Meanwhile, a delay in permitting for B2Gold’s Fekola mine spooked the industry, with Miningmx reporting that “Mali’s new mineral code puts B2Gold Fekola growth at risk.” In the article itself, CEO Clive Johnson attempts to allay industry fears, but also states: “We don’t really understand the implications of the new code yet because the government is still working on it. We are hoping to have the answers in the next couple of months.” He then stressed, “Fekola’s contribution to Mali’s gross national product is huge… We are confident that the current government of Mali wants gold mining and they want more of it.”

Mali is not alone. Nationalist reforms are spreading across West Africa. In October of last year, the government of Burkina Faso increased royalties on the mining industry. Niger has kicked out French and US troops while nationalizing its drinking water, taking back control of this crucial resource from French company Veolia and its local subsidiary SEEN.

The new president of Senegal, a supporter of “system change” and “left-wing pan-Africanism,” has announced an audit of the oil, gas, and mining sectors.

It is fair to say that Mali’s mining reforms fit with this pattern. While the US claims that Mali is turning the screws on the mining industry because it wants to hand lucrative gold mines to Russian interests, these reforms are part of a broader anti-colonial uprising sweeping the region.

If Mali continues to put pressure on Canadian mining companies, it would not be unreasonable to assume Ottawa may involve itself in the dispute.

Owen Schalk is a writer from rural Manitoba. He is the author of Canada in Afghanistan: A story of military, diplomatic, political and media failure, 2003-2023 and the co-author of Canada’s Long Fight Against Democracy with Yves Engler.

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