Barrick Gold Warns of Shutdown as Mali Dispute Escalates
Barrick Gold Corporation (TSX: ABX) warned this week that it may be forced to suspend its mining operations in Mali if the country’s government continues blocking shipments and refuses to reach a negotiated agreement on disputes related to the Loulo-Gounkoto mining complex.
The standoff arises from ongoing disagreements over the implementation of Mali’s 2023 Mining Code, which Barrick argues does not legally apply to its existing operations. Despite previous progress toward a resolution, tensions have escalated in recent weeks, with operational challenges and concerning developments involving Barrick’s management team.
Barrick Gold has operated in Mali for nearly three decades, making the West African nation a significant hub for its global operations. The Loulo-Gounkoto mining complex, in particular, accounts for nearly 14% of Barrick’s annual gold production and stands out for its efficiency, with an all-in sustaining cost approximately $200 per ounce lower than the company’s portfolio average.
However, negotiations with Mali’s government have hit repeated roadblocks. According to a statement from Barrick, the company had previously agreed on a framework for addressing the government’s demand for a larger share of economic benefits. Despite significant concessions, Barrick’s proposals were rejected.
Mark Bristow, President and CEO of Barrick Gold, expressed frustration with the breakdown in talks, saying “recent developments further erode investor confidence in Mali’s mining sector and will deter future investment.”
“Nonetheless, in view of our long-standing commitment to the people of Mali, we remain open to constructive engagement with the government to resolve these issues while protecting the viability of this key economic driver for Mali,” Bristow.
Earlier this month, Mali has issued an arrest warrant for Bristow, accusing him of money laundering and financial violations.
The Malian government, which holds a 20% stake in the Loulo-Gounkoto complex, has reportedly pushed for the mine to operate under the 2023 Mining Code. Barrick maintains that the new code cannot be retroactively applied to its existing agreements.
Barrick’s warning of a potential suspension of operations follows a series of severe setbacks on the ground. Since November 25, senior members of Barrick’s management team in Mali have been imprisoned on what the company describes as “unfounded charges.” The situation reflects a broader pattern of concerns about the criminal justice system’s use against mining executives.
Further complicating the situation, gold shipments from the Loulo-Gounkoto complex have been blocked, halting a critical flow of revenue for both Barrick and Mali’s economy. Without the ability to ship gold, Barrick has stated it will be forced to suspend operations entirely.
Industry experts are closely monitoring the situation. Ben Kramer-Miller, a mining analyst, noted that a shutdown could have significant financial consequences.
“Mali accounts for nearly 15% of Barrick’s production, with lower costs than the rest of its portfolio. The stock is already overvalued before pricing in a shutdown here,” Kramer-Miller said in a post on X.
Barrick’s presence in Mali has been an economic pillar for nearly 30 years. Since its entry into the region, Barrick has invested over $10 billion in Mali’s mining sector. The company’s operations contribute between 5% and 10% of Mali’s GDP annually, underscoring their importance to the country’s broader economic health.
In 2023 alone, Barrick contributed over $1 billion to Mali’s economy through taxes, royalties, and community investments. The Loulo-Gounkoto complex employs approximately 8,000 workers, 97% of whom are Malian nationals.
While Mali has received more than 70% of the complex’s economic benefits, according to Barrick, the government’s recent actions raise concerns about investor confidence in the country’s mining sector.
“Our goal is to ensure long-term sustainability in Mali’s mining sector while delivering shared value to all stakeholders,” Bristow stated.
The dispute with Barrick Gold comes amid broader economic and political instability in Mali. The country has faced mounting security challenges, internal conflicts, and international sanctions following multiple military coups since 2020.
The mining sector, a cornerstone of Mali’s economy, has been a focal point for generating revenue and employment. However, recent changes to Mali’s mining regulations have sparked tensions with international investors, raising concerns over the country’s ability to attract and retain critical foreign investments.
Several mining operators in Mali have reported similar pressures, including tax disputes, restricted shipments, and legal actions against executives. These developments have amplified worries that Mali’s approach risks alienating international partners vital to its economic recovery.
Information for this story was found via the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
