Barrick Gold Corp. ABX-T says it will be forced to suspend its mining operations in Mali if the country’s military regime continues to block gold shipments from one of the company’s biggest international mines.
The suspension of shipments from Barrick’s Loulo-Gounkoto complex is the latest twist in a worsening conflict between the Toronto-based gold miner and the junta that seized power in the West African country in a 2021 coup.
“Local operating conditions have deteriorated significantly with employees imprisoned without cause and gold shipments blocked,” Barrick said in a statement Monday morning. “If shipments remain suspended, Barrick will be compelled to suspend operations.”
Several of Barrick’s senior managers in Mali have been imprisoned since Nov. 25, and legal authorities reportedly issued an arrest warrant for Barrick’s chief executive officer, Mark Bristow, on Dec. 5.
“These actions raise serious concerns about the misuse of the criminal justice system,” Barrick said, adding that the managers were imprisoned on “unfounded charges” after the company was hit with “baseless tax and customs claims.” The arrest warrant for Mr. Bristow was illegitimate, the company said, offering its first comment on the charges that were reportedly filed against him.
Copies of the arrest warrant, posted online by Malian journalists, showed that Mr. Bristow was being charged with money laundering and violating Mali’s financial regulations during the period from 2019 to 2023. Similar charges were also issued against Abbas Coulibaly, the CEO of the Loulo-Gounkoto complex.
“This is just a pressure tactic,” said Rick Rule, the founder and owner of Rule Investment Media.
“They’re trying to adjudicate in the court of public opinion in Bamako, where they are at once the plaintiff, the judge and the jury.”
Mali’s military junta has been applying heavy pressure on foreign mining companies in a bid to obtain a bigger share of their revenues. It has been seeking US$417-million from Barrick in the tax dispute.
The conflict has been going on for many months. In late September, Malian authorities arrested four Barrick employees, holding them in custody for several days before releasing them.
In November, the authorities arrested three employees of Australian-based Resolute Mining, including its CEO, Terence Holohan, and held them for more than a week, until the company promised to pay US$160-million to resolve a tax dispute.
“Recent developments further erode investor confidence in Mali’s mining sector and will deter future investment,” Mr. Bristow said in a statement Monday.
“Nonetheless, in view of our long-standing commitment to the people of Mali, we remain open to constructive engagement with the government to resolve these issues while protecting the viability of this key economic driver for Mali.”
Barrick says it has invested more than US$10-billion in Mali over the past three decades, contributing about 5 to 10 per cent of its GDP annually, including more than US$1-billion last year. It says it has 8,000 workers in Mali.
In October, Mali’s government threatened to take back part of the Loulo-Gounkoto complex, which is projected to produce more than half a million ounces of gold this year. It said it might allow one of the operating permits at the complex to expire because Barrick was failing to fulfill its commitments to the government.
Barrick owns 80 per cent of the complex, but the government introduced a new mining code last year that envisions the government holding ownership stakes of as much as 35 per cent in Mali’s mines.
“Even though the 2023 Mining Code has no application to existing operations such as Loulo-Gounkoto, the government insists on forcing Loulo-Gounkoto under the framework of that Code,” the company said Monday.
Loulo-Gounkoto accounts for about 14 per cent of Barrick’s earnings before interest, taxes, depreciation and amortization (EBITDA).
Since Barrick has many mines in other countries in its portfolio, it can afford to draw the talks out with Mali, said Josh Wolfson, an analyst with RBC Dominion Securities, in an interview.
“They’re trying to make this a negotiation, to my understanding, versus fulfilling a demand,” he said.
In the past, Barrick has played hardball with some countries with varying degrees of success. The Canadian gold miner spent almost three years duking it out with Tanzania in East Africa in a fiscal dispute, with its local subsidiary subject to an export ban for much of that time. Finally, in 2020, Barrick agreed to pay Tanzania a US$300-million penalty and committed to paying it a greater share of the profits from its mines in the country.
Mali has forged close links to Moscow in recent years, recruiting an estimated 1,000 Russian soldiers to boost security. This has opened the door to greater Russian business dealings in the country, including in the mining sector, but Barrick has denied speculation that Russia may be seeking a stake in its gold operations.
In late September, Barrick announced what it described as an agreement with the government, but it soon became apparent that there was no final resolution.
The company said Monday that it had “previously agreed on a framework to achieve a global resolution of the disputes with the Government of Mali over the Loulo-Gounkoto complex,” but it has “been unsuccessful in arriving at a final resolution, despite numerous good-faith attempts to negotiate and a willingness to compromise beyond its legal rights.”