Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Mali is demanding Australia’s Resolute Mining Ltd. pay about $160 million to resolve a tax dispute after the government detained the gold producer’s chief executive, according to people familiar with the matter.
CEO Terry Holohan and two colleagues have been held in the capital, Bamako, since late last week after the Resolute boss traveled to the city for meetings with the nation’s tax and mining authorities. The detention comes as the military rulers of Africa’s third-largest gold producer ratchet up pressure on mining companies to renegotiate economic terms.
The government’s position is that Resolute – which operates the Syama gold mine – should pay the state 100 billion CFA francs ($162 million) to settle a dispute mainly concerning alleged back taxes following a sector-wide audit, the people said, asking not to be named as the matters were private.
The parties have been discussing a potential agreement that would see the company pay half that sum now and half at a later date, one of the people said.
Resolute’s shares fell as much as 4.1% in Sydney on Thursday, taking its losses to more than 35% since news of Holohan’s detention became public at the weekend. The rout has cut the company’s market value to around A$884 million ($574 million).
Resolute declined to comment on Wednesday. The claims against the firm were “unsubstantiated,” the Perth-based miner said in a statement on Nov. 11. “The company is continuing to work with the government on a resolution.”
Mali’s mines and finance ministries didn’t respond to requests for comment.
Resolute previously negotiated a so-called convention for its Syama asset that runs until 2029, but the nation’s junta have upped pressure on firms with operating gold projects in the country after passing legislation last year that increases the state’s share of economic benefits from mining projects. Their toughening stance also coincides with a 25% jump in the price of bullion this year.
The authorities have also threatened to reclaim Barrick Gold Corp.’s Loulo mine permit when it expires in 2026. Mark Bristow, CEO of the world’s no. 2 gold producer, said last week that his company is discussing a “mutually acceptable outcome” with Mali’s leaders.
Allied Gold Corp. and B2Gold Corp. have recently announced agreements that will govern the future operations of their Sadiola and Fekola projects in the country. They will pay about $116 million and $204 million respectively to the state under the deals, according to company statements.
Mali has been under military rule since 2020, when interim leader Colonel Assimi Goita ousted the West African nation’s elected president, citing the previous regime’s failure to repel the Islamist insurgents. Since then, mercenaries from the Kremlin-backed Wagner Group have been deployed to the country, while European forces and a United Nations peacekeeping mission were forced to withdraw.
(By William Clowes and Katarina Höije)
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