The detention in Mali of an international mining boss and two of his colleagues has raised alarm across the industry about growing personal risks for executives in the gold-rich west African nation.
Resolute Mining’s chief executive Terry Holohan was detained on Friday in Bamako along with two other employees of the Australian gold producer.
The three British citizens are among seven executives of western mining companies to have been held in Mali in the past two months as tensions rise between the industry and the military junta, which has sought to extract more money from the sector since taking power in 2021.
The latest detentions represent a significant “escalation” by the junta, according to Steven Lepine, an energy and mining expert at consultancy AlixPartners.
“It is an awakening for mining companies,” he said. “Everyone knows that there is jurisdictional risk but it’s an awakening that it can be a personal risk for management — this really raises the bar.”
The Malian government rewrote the mining code last year to extract higher revenue from the industry, and this summer started to renegotiate companies’ existing contracts under the new law.
Several smaller mining companies have already completed the renegotiation but the process has become increasingly acrimonious for larger peers including Sydney and London-listed Resolute, and New York-listed Barrick Gold.
Malian authorities in September detained four senior employees of Barrick, the world’s second-biggest gold miner by market capitalisation, for four days.
The company made an $85mn payment to the government in October related to its ongoing negotiations, as Mali demands a total of about $350mn in alleged back taxes from Barrick, according to people familiar with the matter.
Mali’s new mining code allows the government to take up to 30 per cent of projects, with a further 5 per cent required to be sold to private Malian investors. The 35 per cent Malian ownership that the government can now mandate is up from 20 per cent previously.
Certain tax breaks have been abolished and companies are also being asked to pay back taxes and outstanding VAT.
The companies that have completed negotiations under the new mining code include Toronto-listed B2Gold, Allied Gold and Robex Resources, and London-listed lithium developer Kodal Minerals.
For the companies still in talks, the outcome could have significant financial implications.
About two-thirds of Resolute’s gold production comes from Mali, where the company operates its biggest asset, the Syama gold mine.
The company has not disclosed the Malian government’s demands in the current negotiations but in its 2022 financial report the miner said it was contesting authorities’ demands for back tax payments of more than $100mn — equivalent to the company’s entire net profit last year.
Other companies operating in Mali that have not yet concluded the negotiation process include London-listed gold producer Hummingbird Resources, which is undergoing restructuring, and Cora Gold, which has not yet applied for a mine permit on its prospective gold asset.
Mali last month announced the nationalisation of the Yatela gold mine, a non-operating asset in which Johannesburg-headquartered AngloGold Ashanti and Canada’s Iamgold each own a 40 per cent stake, with the remainder owned by the government.
John Meyer, partner at corporate advisory firm SP Angel, said the new rules represented a “significant increase in the effective taxation of miners” operating in the country.
“A near worst-case scenario now appears to be evolving whereby companies are being required to hand over a further 15 per cent of their projects in Mali for very little in the way of compensation,” he said. “The situation will dissuade many companies from further investment in Mali, and we suspect all but the most essential exploration will stop.”
However, Barrick is sanguine about its prospects of resolving its dispute in Mali, which accounts for 13 per cent of the company’s gold production.
Chief executive Mark Bristow said the company’s Loulo-Gounkoto complex, one of the country’s biggest gold mines, was not at risk of being nationalised.
“They’ve told me directly this is not the case,” he told the Financial Times last week, adding that both sides wanted to find a workable solution.
Barrick is Mali’s biggest taxpayer and largest employer outside of the civil service, according to Bristow, with about 7,000 direct employees.
“We’re long-term players in Mali and we’ll be there for decades,” he said. “If you up the revenue take for government and royalties, you effectively increase the costs . . . ultimately the country doesn’t benefit.”
However, Barrick has been struggling to reach Malian leader Assimi Goïta and has been dealing with outside consultants working for the government, according to a mining industry leader familiar with the talks who said this had made the negotiations harder to conclude.
Other countries ruled by military juntas in Africa’s so called “coup belt” have also taken a harder line on mining groups as they seek to draw greater revenue from them.
Burkina Faso’s government recently nationalised two gold mines, with London-listed Endeavour Mining accepting $60mn plus royalties for assets it had previously agreed sell to Lilium Mining for more than $300mn.
Niger in June stripped French state-owned nuclear fuel producer Orano of its licence to operate the Imouraren mine, one of the world’s largest uranium projects. The company has launched legal action against the country’s government.
Russian influence is also growing in the region, with Moscow-linked mercenary organisation the Wagner Group active since 2021 in Mali, which ejected troops from France, its former colonial power, the following year.
“The levels of instability in west Africa have clearly gone up,” said Daniel Litvin, founder of strategic advisory firm Resource Resolutions. “As a government, you can squeeze existing miners who have already invested, but that is a big deterrent to future investment . . . There’s a risk of killing the goose that lays the golden egg.”
