Gold Seizure Forces Barrick to Suspend Mali Operations

Ericson Mangoli By Ericson Mangoli
4 Min Read
Gold Seizure Forces Barrick to Suspend Mali Operations.

Barrick Gold, the Canadian mining giant, has officially suspended its operations at the Loulo-Gounkoto complex in Mali.

The decision follows the military-led government’s recent seizure of gold stocks, which were moved to a custodial bank over the weekend, escalating tensions between the company and the Malian authorities.

Regrettable Necessity

In a statement released on Tuesday, Barrick described the suspension as “regrettable” but necessary. The company’s priority remains the resolution of the ongoing dispute with the Malian government.

“Barrick remains committed to constructive engagement with the Malian government and all stakeholders to find an amicable solution that ensures the long-term sustainability of the Loulo-Gounkoto mining complex and its vital contribution to Mali’s economy and communities,” the statement emphasized.

Details regarding the quantity of gold seized remain unclear; however, Reuters reported that the value of gold moved to the state-owned Banque Malienne de Solidarité (BMS) in Bamako is estimated to be around $245 million.

Impact on Barrick and Malian Economy

Despite the turmoil, Barrick’s shares saw minimal movement, trading at $15.45 in New York and C$22.32 in Toronto.

However, the stock has experienced a decline of over 20% since October, when Mali issued initial threats against Barrick.

The suspension underscores the significant impacts on the local economy, particularly concerning the 8,000 employees and local service providers dependent on the Loulo-Gounkoto complex for their livelihoods.

The dispute also involves a $512 million tax claim, with Mali asserting its right to a larger share of the profits stemming from the complex.

As negotiations and tensions continue, the stakes have heightened with the Malian government restricting gold shipments, which serves as a crucial economic driver for the country, accounting for 80% of its exports.

A Broader Context of Economic and Political Instability

Gold Seizure Forces Barrick to Suspend Mali Operations
The Loulo-Gounkoto mine produced Barrick’s second-biggest output of gold in 2023 after mines in Nevada © Simon Dawson/Bloomberg

This situation occurs amidst a backdrop of political instability in Mali, which has been under the rule of a military junta following two coups in 2020 and 2021.

The junta has been scrutinizing contracts with mining companies, advocating for renegotiations to secure a larger share of profits.

While companies like Allied Gold and B2Gold have successfully navigated new agreements, Barrick’s case stands out due to the ongoing arbitration proceedings initiated in December through the International Centre for the Settlement of Investment Disputes (ICSID).

Significantly, the tensions have escalated further with the detention of several of Barrick’s Malian employees on what the company deems “unfounded charges,” along with an arrest warrant issued for Barrick’s CEO, Mark Bristow.

Contribution to the Malian Economy

The Loulo-Gounkoto complex, developed during Bristow’s time at Randgold before Barrick’s acquisition in 2018, has been foundational to Mali’s economy.

Over the past 29 years, Barrick has invested more than $10 billion in the region, contributing between 5% and 10% of Mali’s GDP annually.

In the last year alone, the company injected over $1 billion into the local economy, with 97% of its workforce comprised of Malian nationals.

Despite the current standoff, Barrick maintains that over 70% of the economic benefits from the complex have directly enriched the Malian state.

The mining sector’s challenges, compounded by regulatory changes and geopolitical tensions, continue to threaten not only the company’s operations but also the broader economic stability of Mali.

As Barrick seeks to resolve this dispute while maintaining its significant investment and contributions to Mali, the coming weeks will be crucial in determining the future of both the company and the Malian mining landscape.

 

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