Barrick Gold (TSX:ABX; NYSE:GOLD) followed through with its threat to suspend operations at its Loulo-Gounkoto complex in Mali after the military-led government moved gold stocks to a custodial bank.
“Barrick has regrettably initiated the temporary suspension of operations while it continues to work towards a resolution,” the Toronto-based company said on Tuesday.
Authorities airlifted some three tonnes — valued at US$245 million — of the yellow metal by helicopter starting Saturday, Reuters reported on Monday, citing four sources close to the situation and a company memo to employees. The seized amount is worth about US$245 million, the sources said, noting the miner had at least another tonne on site then. It wasn’t clear if it’s since been moved.
Shares in Barrick Gold fell about 1% early Tuesday before climbing back to even at $22.26 apiece in Toronto for a market value of $38.8 billion. They’ve traded in a 52-week range of $18.65 to $29.50.
The suspension follows months of escalating tensions between Barrick and the Malian government, which claims the miner owes it US$512 million in back taxes. The division of economic benefits from the Loulo-Gounkoto complex, which produced nearly 700,000 oz. of gold in 2023, remains an issue after the government revised its mining code in 2023 to give the state higher stakes in projects. Since early December, it’s restricted gold shipments from the site.
Seeks engagement
“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 its brief statement Tuesday.
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.
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: RSG; LSE: RSG). In November, the junta detained CEO Terry Holohan and two other employees for nearly two weeks before the company agreed to pay US$160 million.
Barrick faced a potentially similiar situation after the junta issued an arrest warrant for CEO Mark Bristow, while it’s continued the detention of several of Barrick’s Malian employees. The company says the authorities are using “unfounded charges.”
In October, Barrick paid US$85 million to the government amid negotiations the company said looked as if may be completed by the end of December. But then both sides appeared to trade shots in accusations. Barrick initiated arbitration proceedings in December through the International Centre for the Settlement of Investment Disputes and the government imposed the export ban on Loulo-Gounkoto.
“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,” Bristow said earlier this week.
Economic cornerstone
The Loulo-Gounkoto complex, developed during Bristow’s tenure as CEO of Randgold before Barrick bought it in 2018, is a cornerstone of Mali’s economy. Over the past 29 years, the two companies invested more than US$10 billion in the country, contributing between 5% and 10% of Mali’s GDP annually. Barrick says it injected over US$1 billion into the local economy last year alone.
Other companies operating in Mali include Allied Gold (TSX: AAUC), which signed a 10-year deal on its Sadiola mine with Mali in September. B2Gold (TSX: BTO; NYSE-A: BTG) agreed with the government separately the same month on the Fekola mine.
The authoritarian state is among several in a string across the Sahel region, such as Burkina Faso, Niger, Chad and Sudan, facing some of the world’s worst poverty and Islamic insurgents. Most have booted out civilian governments, French colonial-era troops and American aid while pivoting to Russia for help.
They see increased resource nationalism as one way to fund their governments and fight jihadist-linked terror. It’s all made West Africa an increasingly difficult region to navigate for Western mining companies.
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