Escalating Tensions in Mali's Mining Sector: Barrick Employees Detained

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

Barrick reported on November 26 that these employees had been detained once again and were facing charges pending trial. The company has stated that it refutes the charges and remains committed to working with the government to find a solution that will support the long-term viability of its operations in Mali.

This incident is part of a series of confrontations linked to Mali's lucrative gold mining sector.

The new arrests come shortly after the Malian government 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 arose from a sector-wide audit conducted by the government. Resolute has denied the claims made against it and maintained that it followed all official processes in response to the audit. Eventually, the company settled with the government and the executives were released on November 21.

By November 28, Resolute had paid US$130 million to the government, with plans to pay the remainder by the end of the year.

Regarding the conflict between Barrick and the Malian authorities, this situation has been ongoing since late September, when these four employees were first detained. Barrick and the government reached a preliminary agreement on September 30 to create a framework for resolving disputes and increasing the state's financial benefits from the Loulo-Gounkoto complex, leading to the employees' initial release.

Nonetheless, on October 8, the Malian government claimed it wanted at least US$512 million from Barrick, citing outstanding taxes and dividends. By late October, the government accused the company of violating commitments related to an agreement aimed at ensuring a better distribution of mining revenue.

Barrick has rejected these allegations, highlighting that it made an US$85 million payment to the government to address outstanding issues.

However, negotiations have stalled recently, culminating in the new detentions of employees.

Government's Moves to Restructure Mining Agreements

The military-led government of Mali has been advocating for greater control over the mining industry ever since it revised its mining code following a coup in 2020.

The updated regulations require foreign mining companies to provide a larger share of financial benefits to the state, which heavily depends on gold mining for much of its revenue.

The detentions of employees from Barrick and Resolute illustrate the government's toughened stance in asserting its authority over the mining sector. Officials believe that enhanced revenue from mining is critical for national development, yet this confrontational approach raises concerns among international investors.

As leading mining operators in Mali, Barrick and Resolute's disputes with the government may have significant implications for the mining industry, which plays a major role in the country’s GDP and export earnings.

The rising tensions are creating a climate of instability within the sector, with experts warning that the government's actions could deter foreign investors, potentially impacting production levels and hindering future investment.

Barrick has emphasized its lengthy history of cooperation with successive Malian governments, and its president and CEO, Mark Bristow, is advocating for ongoing dialogue to resolve the current disputes.

"Our efforts to find a mutually acceptable resolution have thus far been unsuccessful, but we remain dedicated to engaging with the government to address all claims against the company and its employees and to secure the prompt release of our unjustly detained colleagues," Bristow stated in the company’s latest update.

Mali, Mining, Detention