Barrick Gold has reached an agreement to pay $438 million to the Malian government, resolving a dispute that halted mining operations crucial to the country’s economy. This agreement highlights the growing tensions between Western mining firms and African governments amidst shifting regulations and resource nationalism, particularly in Mali, Burkina Faso, and Niger, where geopolitical considerations are shaping investor relations.
Mark Bristow, CEO of Barrick Gold, shared insights about past disputes with African leaders during an interview at a mining conference in Cape Town. Dismissing Mali’s December arrest warrant, he described such legal challenges as inherent risks of operating in complex environments. “Mining is a long-term game,” he remarked, emphasizing that dialogue is key to resolving conflicts.
On February 19, Barrick Gold and the Malian government resolved a two-year dispute that halted mining operations contributing significantly to the nation’s economy. Mali accused Barrick of unpaid dues and social violations, initially demanding $500 million but later raising it to $5.5 billion. Under the new agreement, Barrick will contribute $438 million, resulting in the release of detained local employees and the return of seized gold ore.
The increasing resource nationalism in Africa poses challenges for Western mining firms. Governments from Ivory Coast to Zambia are revising mining codes to secure more revenue and ownership stakes due to rising global mineral demand. The situation is particularly pronounced in Mali, Burkina Faso, and Niger, which have shown resistance to Western influence while tightening their control over resources.
Since seizing power in 2020, Mali’s junta has focused on amending mining regulations to enhance state ownership from 10% to 30%. The junta’s audit claimed nearly $1 billion in revenue loss, prompting a revision of the tax structure, which included retroactive applications of new regulations. During negotiations with Barrick, Mali secured additional tax payments amounting to $635 million.
Mali’s neighbors are observing its stringent approach. Niger revoked a mining license from Orano while Burkina Faso nationalized two mines and claimed gold from a Canadian company under the guise of public necessity. This trend has raised concerns about the motivations of these juntas, with many speculating that they favor partnerships with countries like Russia and China over Western firms.
While geopolitical considerations influence the mining landscape, financial necessities remain prevalent. Economies in these regions face challenges, with Burkina Faso witnessing mine closures, and Mali struggling to finance its agreements with Russian mercenaries. Increased taxation on small businesses and essential services has frustrated local entrepreneurs, although a majority support the government’s efforts to recalibrate mining agreements.
The long-term impact of these policies may jeopardize Mali’s economy, as reports indicate a 25% drop in gold production in 2024. Although major players like Barrick remain, uncertainty regarding further investments has arisen, prompting some firms to withdraw. “Mining is by far the foundation of that economy, and you can destroy it in a heartbeat,” warned Bristow.
Currently, many Western mining companies still operate in the Sahel, with some maintaining positive relationships with local governments. Despite past permit revocations, certain operations continue smoothly. Bristow stated that while Barrick would resist any economically detrimental demands, the company remains open to constructive negotiations for equitable tax contributions.
The financial settlement between Barrick Gold and Mali’s government underscores the complexities of mining operations within resource-rich nations facing strict regulatory changes and geopolitical shifts. While the agreement reflects a commitment to dialogue, the evolving landscape of mining laws presents significant challenges, particularly for Western companies navigating increasing demands amid a backdrop of nationalist policies. The sustainability of such partnerships remains contingent upon fostering cooperation and ensuring economic viability for both parties.
Original Source: www.techinafrica.com
