Barrick Gold Corp. ABX-T is seeking international arbitration against Mali, escalating a long-running fiscal fracas between Canada’s second-biggest gold miner and the west African country.
Toronto-based Barrick in a statement on Wednesday said it has filed a request for arbitration to the International Centre for the Settlement of Investment Disputes (ICSID) over the situation involving its Loulo-Gounkoto mining operations.
Earlier in the week, Barrick said that Mali was blocking it from shipping gold out of the country and that it may have to halt production there as a result. The two Malian mines account for about 14 per cent of the company’s earnings before interest, taxes, depreciation and amortization.
Mali’s military junta, which seized power in a 2021 coup, has been applying extreme pressure on foreign mining companies in a bid to obtain a bigger share of the economics. Mali has also forged close links to Moscow in recent years, recruiting an estimated 1,000 Russian soldiers to boost security.
Two other mining companies, Canada’s B2Gold Corp. BTO-B and Australia’s Resolute Mining Ltd., both recently settled fiscal disputes with Mali, but at a significant cost. The country has been seeking at least US$417-million from Barrick.
Several of Barrick’s senior managers in Mali were imprisoned on Nov. 25 on what the company characterized as “unfounded charges.” An arrest warrant alleging money laundering and other financial violations was later issued for Barrick chief executive officer Mark Bristow.
The company said that is taking Mali to arbitration because it believes in “established processes for resolving disputes in a fair and transparent manner.”
This isn’t the first time that Barrick has sought arbitration against a hostile host country. It is a process that typically takes years to play out, and even if a positive outcome is obtained, there is no guarantee of obtaining payment.
In 2011, the company and its partner launched arbitration proceedings against Pakistan in a dispute over the right to mine a massive copper and gold project in the country. It took seven years for Barrick to be awarded a multibillion-dollar payout. It would be another three years before a new deal was reached that saw the company opt to move forward on the project, in lieu of receiving a cash payment from Pakistan.
In 2020, Barrick started international arbitration proceedings against Papua New Guinea. That dispute was ultimately resolved directly between the two parties in a 2021 agreement, but it wasn’t until the end of 2023 that the company’s mining operations restarted in the country.
After the junta came to power in Mali, it cancelled a security agreement with France, expelled the United Nations peacekeeping mission and withdrew from the West African bloc of countries. Given those convulsions, it is unclear whether the junta would abide by a ruling of an international arbitration body in any case against Barrick.
In November, Malian authorities arrested three employees of Resolute Mining, including CEO Terence Holohan, and held them for more than a week. The individuals were released only after Resolute promised to pay Mali US$160-million to resolve tax charges. Rick Rule, a well-known mining sector investor and owner of Rule Investment Media, characterized the payment as extortion.
“The government of Mali didn’t demonstrate to the world community that Resolute was actually guilty of any infractions under existing Malian tax code,” he said.
Vancouver-based B2Gold managed to negotiate a new fiscal agreement with Mali in September without any of its executives getting arrested. As result of the new agreement, B2 agreed to enhanced retained earnings distributions to Mali by converting its ordinary share interest in the Fekola mine to preferred shares.
B2 CEO Clive Johnson said in a presentation at a gold conference earlier this year that uncertainty in Mali over the past few years was responsible for the company losing about $5-billion in market value.
Agnico Eagle Mines Ltd. AEM-T earlier this year passed Barrick to become Canada’s biggest gold mining company by market valuation. Barrick’s star has fallen in part because of disputes abroad with host countries. Over the past five years, the company has been battered by uncertainty over fiscal agreements with Tanzania, Papua New Guinea and now Mali.
Canada’s First Quantum Minerals Ltd. FM-T took Panama to international arbitration last year after the country ordered the shutdown of its Cobre Panama copper mine. The matter remains unresolved, and the Vancouver-based mining company’s share price is trading about 50 per cent lower than it was before relations with the country went south.