Mali unrest puts gold miners on edge

Businesses operating in Mali should expect a hike in mining taxes and an increase in terrorism risk in the wake of a coup attempt in the West African nation, warns Exclusive Analysis, a London-based specialist intelligence company that forecasts commercial and political risks worldwide.

Rebel troops ousted President Amadou Toumani Touré on March 21 claiming his government mishandled an insurgency by Tuareg militia groups in the Saharan north of Mali.

The move comes one month before the president was expected to step down after 10 years in office during national elections slated for April 29.

Valerie Arnould, senior Africa forecaster at Exclusive Analysis, says the rebel soldiers are frustrated that the government has not given them the proper arms and equipment necessary to campaign against the Tuareg. At the same time, the families of soldiers who have died in battle have not been compensated adequately and soldiers have had to fight in difficult conditions with little pay.

Disgruntled soldiers in Mali’s armed forces are also upset that after fleeing Tuareg advances in the north earlier this year and escaping across the border into neighbouring countries such as Algeria and Niger, they were repatriated to the capital of Bamako and ordered to rejoin their barracks and resume fighting in the north. In addition, many soldiers view the president and members of the senior military command as being corrupt and having embezzled foreign aid, rather than giving the much-needed funds to the military.

Tuareg attacks have increased since January when hundreds of Tuareg fighters, who had left Mali to join the better-paid ranks of the Libyan army under Muammar Gaddafi, returned home after the dictator was killed last October.

The Tuareg have led uprisings in the 1960s, 1990s, early 2000s and between 2006 and 2009, all of which focused on the nomadic people demanding recognition of their identity and an independent state, according to the Al Jazeera news agency. The Tuareg are semi-nomadic herders and traders living in Northern Mali. Across Mali’s borders in Niger, Burkina Faso, Algeria and Libya, Tuareg descendants from Berbers of North Africa practice Sunni Islam.

Looking ahead, Arnould believes fighting in the north will escalate. “Tuareg rebels are likely to take advantage of the situation to consolidate their positions in the north, particularly in the Kidal region, but are unlikely to move to capture Bamako,” she says. “Northern uranium mining operations and oil exploration will be at heightened risk from Tuareg rebels and, to a lesser extent, al-Qaeda in the Islamic Maghreb. Most gold mines are far away in the south and will be at a much lower risk.”

At this point it remains unknown what percent of the armed forces in Mali are behind the insurrection, and Arnould doesn’t believe any one person among the coup plotters has the military or political authority to step in and take permanent national leadership.

“It’s not clear whether this was a premeditated coup or whether it was a mutiny that escalated into a coup, because the coup doesn’t seem to have the support of any senior commanders in the military,” she says in a telephone interview.

What is clear, however, is that political opposition groups in the country will use the coup to advance their own agenda. “Some members of the political opposition are likely to back the coup and push for the formation of a government of national unity and the postponement of the April presidential elections,” she says.

In the meantime, she adds, “there is a risk that whatever transitional authority is put in place to rule ahead of elections could review or revoke contracts in the uranium, phosphate, gold and mining sectors that the government has concluded in recent years, amidst allegations of corruption.”

A transitional authority is also likely to raise taxes — particularly on mining operations — to better support the military, she claims. “There is a risk that more taxes will be put on mining because the industry is seen as the main source of revenue for the government. And raising taxes on mining companies wouldn’t raise popular discontent.”

John Begeman, president and chief executive of Avion Gold (AVR-T), commented in a press release that all of the company’s operations at Kofi and Tabakoto — 350 km away from Bamako — are running normally and are “for the most part unaffected,” and noted that “Mali has had democratic rule for twenty years, and we do not expect any change in the political orientation of the country or its peoples.” Retired Canadian General Lewis MacKenzie, an Avion board member, noted in a subsequent press release that “the modest amount of violence to date on both sides is encouraging and suggests an opportunity for an early resolution of the conflict centered in and around the capital of Bamako.”

Michael Nikiforuk, president and chief executive of African Gold Group (AGG-V), a junior exploring for gold at its Kobada project 125 km south of Bamako, declined to comment until the situation is “more clear and better understood.”

In a press release Randgold Resources (RRS-L, GOLD-Q), whose chief executive Mark Bristow is at the company’s Loulo complex in Western Mali 350 km from Bamako, says it is keeping a close watch on developments.

The gold producer describes country affairs as “calm,” but adds that “exact details are unclear.”

“Malians respect laws and I don’t believe this will come with a high-handed change in political direction,” Bristow says in a statement. “We don’t expect any subsequent governments to disregard proper and due process.”