Barrick halts operations in Mali after $245m in gold seized

“Barrick remains committed to constructive engagement with the Malian government and all stakeholders to find an amicable solution that ensures the long-term sustainability of the Loulo-Gounkoto mining complex and its vital contribution to Mali’s economy and communities,” the company said in the statement.

The Toronto-based miner did not say what amount of the precious metal had been seized and transported by helicopter to the state-owned Banque Malienne de Solidarité (BMS) in the capital Bamako. Reuters reported on Monday the value of the gold taken by the Malian government is estimated to be around $245 million.

Barrick’s shares remained relatively unchanged, trading at $15.45 as of 10:10 a.m. in New York and at C$22.32 in Toronto. The stock has dropped over 20% since Mali initially issued threats against the company in October.

The suspension follows months of escalating tensions between Barrick and the Malian government, which claims the miner owes it $512 million in back taxes. The division of economic benefits from the Loulo-Gounkoto complex, which produced nearly 700,000 ounces of gold in 2023, remains an issue after Mali revised its mining code in 2023 to give the state higher stakes in projects.

Since early December, the country, which owns a 20% stake in the Loulo-Gounkoto complex, has restricted gold shipments from the site.

“The inability to ship gold not only affects operations but has broader implications for the local economy, the 8,000 employees, and the many local service providers,” chief executive Mark Bristow said earlier this week.

Barrick initiated arbitration proceedings in December through the International Centre for the Settlement of Investment Disputes (ICSID) while simultaneously pursuing negotiations to establish a new memorandum of agreement with the Malian government. The proposed document seeks to resolve disputes, redefine their partnership, and increase Mali’s share of the complex’s economic benefits.

The situation has been further complicated by the continued detention of several of Barrick’s Malian employees on what the company describes as “unfounded charges.” The country also issued an arrest warrant for Bristow.

Economic bedrock

The suspension of all activities at Loulo-Gounkoto and the tense standoff with authorities come at a critical time for Mali’s mining industry, which faces the complexities of political instability and a revamped regulatory framework.

Since commissioning a sector-wide audit in 2022 and introducing new industry legislation two years ago, the Malian junta has been urging mining investors to renegotiate the economic terms of their contracts with the state.

The junta, which came to power over two coups in 2020-21, has also squeezed millions from other Western gold miners, such as Resolute Mining (ASX, LON: RSG). In November, Mali detained CEO Terry Holohan and two other employees for nearly two weeks before the company agreed to pay $160 million. 

Other companies operating in Mali have had better luck. Allied Gold (TSX: AAUC) signed a 10-year deal on its Sadiola mine with Mali in September and B2Gold (TSX: BTO)(NYSE-A: BTG) agreed with the government separately the same month on the Fekola mine. 

On Jan. 6, Barrick set a seven-day deadline for Mali to remove the export limits and resolve the dispute over Loulo-Gounkoto. The complex accounts for about 14% of Barrick’s forecast output this year. Mali, Africa’s second-largest gold producer, depends on the metal for 80% of its exports.

Barrick’s Loulo-Gounkoto complex, developed during Bristow’s tenure as CEO of Randgold before its acquisition by Barrick in 2018, is a cornerstone of Mali’s economy.

Over the past 29 years, the company has invested more than $10 billion in the country, contributing between 5% and 10% of Mali’s GDP annually. Last year alone, Barrick injected over $1 billion into the local economy.

The mine complex is also one of Mali’s largest taxpayers and employers, with 97% of its 8,000-strong workforce being Malian nationals. According to Barrick, more than 70% of the economic benefits from the complex have gone directly to the Malian state.