Barrick Gold TSX:ABX seems to have come to an agreement with the government of Mali which has put an end to a long running dispute that cast a cloud over relations between large miners and governments in West Africa. The government of Mali has been seeking a bigger share in Barrick’s gold mining activity in the country.
As part of the dispute the government in Mali has detained employees of Barrick Gold and also seized some of its gold; this has however also led to the shutdown of Barrick Gold’s mining operation in the country.
Mali has been keen for Barrick to restart gold mining operations in the country. At the same time Barrick will want to capitalise on the fact that gold is currently trading at record highs.
Lose-lose situation for Barrick and Mali
This has been a lose-lose situation for both Mali and Barrick. According to Mark Bristow, CEO of Barrick, the Canadian miner paid the government of Mali $460 million last year and was due to pay it $500m this year.
The dispute was partly created by the new military junta in Mali which seized power in 2020. It wanted to make sure that profits from the mining sector in the country would flow into the local economy and was also conscious that gold prices were on the up. Several miners reached agreements with the government but some have seen personnel detained as Mali has tried to strong arm miners in the country.
Mali remains very important for Barrick and in 2024 its operations there contributed over a billion dollars in revenues.
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Loulo-Gounkoto is Barrick Gold’s primary mining complex in Mali and is situated close to the border with Senegal. The company has two distinct mining permits in Mali.
Restrictions on gold exports
As of last month Barrick Gold said that it remained restricted from shipping gold from the mining complex. The government in Mali had also moved existing gold stock from the company’s storage site to a custodial bank which was further preventing the shipment and sale of the gold. This is what forced Barrick to temporarily suspend its operations while it was trying to work towards a resolution with the government.
Barrick Gold also said that it had submitted a request for arbitration to the International Centre for the Settlement of Investment Disputes in accordance with the provisions of the Mali mining conventions. The minor said that this arbitration mechanism had previously proved to be an effective tool for reinforcing partnerships and finding acceptable solutions via an independent and competent authority.
“Over its nearly three decades of operating in Mali, Barrick has consistently demonstrated its long-term commitment to the country and its people. While this process is ongoing, Barrick remains open to continued dialogue with the government to resolve these issues amicably and ensure the long-term success of the Loulo-Gounkoto complex,” said CEO Bristow.
Mali and neighbouring countries continue to be subject to a tide of violence, much of it perpetrated by armed Islamist groups, mercenaries and rogue counter-insugency forces. The country plays host to a wide range of mining companies, including majors like Allied Gold, B2 Gold and IAMGOLD.
