Barrick gives Mali a week to lift restrictions before shutting Loulo-Gounkoto mine

Barrick Gold (TSX: ABX; NYSE: GOLD) has set a deadline this week for Mali to remove new export limits and resolve a dispute over its Loulo-Gounkoto mining complex or it may temporarily close the operation. 

The West African country ruled by a military government has extended its ban on exporting gold to include the site’s on-hand stock of the precious metal. The order is “unwarranted” and contrary to the dispute resolution mechanisms agreed upon with authorities, Barrick CEO Mark Bristow said on Monday.

“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. He warned that if the issue is not resolved within a week, Barrick will be forced to temporarily suspend operations— a move he described as “deeply regrettable but necessary.”

Shares in Barrick Gold slid 2.4% Monday morning in Toronto to $22.36 apiece, valuing the company at $39.5 billion.

Barrick submitted in December a request for arbitration through the Washington, D.C.-based International Centre for the Settlement of Investment Disputes. It’s also seeking to negotiate a memorandum of agreement with the Malian government. This document aims to resolve disputes, redefine their partnership and increase the state’s share of the benefits from Loulo-Gounkoto.

Taxes, detentions

Tensions remain high after the junta declared in October that Barrick owed the regime US$500 million in back taxes, then issued an arrest warrant for Bristow in December. Shipments of gold have been restricted for about a month. The situation is further complicated by the continued detention of several Malian employees of Barrick on what the company describes as “unfounded charges.” 

The blockade of gold shipments and the standoff with authorities come at a critical time for Mali’s mining industry and the region. Mali is one of a string of African countries including Burkina Faso, Niger and others ratcheting up pressure on Western miners to give more to host states.

As the country navigates the complexities of political instability and a new mining code increasing the government’s stakes, the fate of one of its most significant economic drivers hangs in the balance.

US$10B investment

Barrick’s Loulo-Gounkoto complex, developed during Bristow’s tenure as CEO of Randgold before its acquisition by Barrick in 2018, produced nearly 700,000 oz. of gold in 2023. Over the past 29 years, the company says it has invested more than US$10 billion in the country, contributing between 5% and 10% of Mali’s GDP annually. Last year alone, Barrick injected over US$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.

“We are committed to dialogue and finding a mutually acceptable resolution that allows us to secure the future of Loulo-Gounkoto as a vital economic contributor to Mali,” Bristow reiterated.