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Barrick Employees Detained in Mali as Mining Sector Tensions Escalate

by admin November 29, 2024
November 29, 2024
Barrick Employees Detained in Mali as Mining Sector Tensions Escalate

The ongoing disputes between the Malian government and international mining companies continue to intensify as Barrick Gold (NYSE:GOLD,TSX:ABX) recently confirmed four Malian employees from its Loulo-Gounkoto mining complex had been arrested.

Barrick reported on November 26 that the employees had again been detained and charged pending trial. The company stated it refutes the charges, and said it remains committed to engaging with the government to reach a resolution that ensures the long-term viability of its operations in Mali.

This marks the latest development in a series of confrontations centered around Mali’s lucrative gold mining sector.

The new arrests come just weeks after Mali demanded US$162 million in back taxes from Resolute Mining (ASX:RSG,LSE:RSG) and detained its CEO, Terence Holohan, along with two senior executives, on November 8.

The detentions were linked to a sector-wide audit conducted by the government. Resolute denied the claims and stated that it had followed all official processes in response to the audit. However, the company ultimately agreed to the payments, and the government released the executives on November 21.

As of November 28, Resolute has paid US$130 million to the government, and plans to pay the rest by the end of the year.

As for the conflict between Barrick and Malian authorities, it has been ongoing since late September, when the same four employees were detained for the first time. Barrick and the government reached a preliminary agreement on September 30 to establish a framework for resolving disputes and increasing the state’s share of benefits from the Loulo-Gounkoto complex, resulting in the employees’ release.

However, on October 8, the Malian government announced it wanted at least US$512 million from the company, claiming outstanding taxes and dividends. Then, in late October, the Malian government accused the company of breaching commitments under an agreement designed to ensure a fairer distribution of mining revenues.

Barrick disputed these claims and emphasized that it had made a US$85 million payment to the government as part of its efforts to resolve outstanding issues.

However, negotiations have stalled in recent weeks, culminating in the new detentions.

Mali government’s efforts to restructure mining agreements

Mali’s military-led government has been pushing for greater control over the mining sector since it revised its mining code. It seized power in the country through a coup in 2020.

The updated framework requires foreign companies to cede more financial benefits to the state, which heavily relies on gold mining as a primary source of revenue.

The detentions of employees from Barrick and Resolute reflect the government’s changed stance in asserting its authority over the sector. Officials argue that increased revenue from mining is essential for national development, but the confrontational approach has raised concerns among international investors.

Resolute and Barrick are among the largest mining operators in Mali, and their disputes with the government could have far-reaching implications for Mali’s mining sector, which accounts for a significant portion of the country’s GDP and export revenue.

The heightened tensions are creating instability in the sector, and industry observers warn that the government’s actions risk alienating foreign investors, potentially affecting production levels and slowing future investment.

Barrick has highlighted its 30 year history of cooperation with successive Malian governments, and its president and CEO, Mark Bristow, is calling for continued dialogue to resolve the current impasse.

“Our attempts to find a mutually acceptable resolution have so far been unsuccessful, but we remain committed to engage with the government in order to resolve all the claims levied against the company and its employees and secure the early release of our unjustly imprisoned colleagues,” Bristowe said in the company’s most recent update.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

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