KEY POINTS
- Mali’s government threatens to let Barrick Gold’s Loulo mining permit expire in 2026 amid disputes over economic benefits.
- Tensions escalate as Mali demands a greater share of profits from the Loulo-Gounkoto complex, rejecting Barrick’s proposed 55/45 split.
- Mali seeks $500 million in unpaid taxes and dividends from Barrick, aligning with its new mining code for increased state revenue.
The conflict over income sharing from the gold-rich Loulo-Gounkoto complex has escalated as Mali’s military government has threatened to allowing Barrick Gold Corp.’s Loulo mining lease to expire in 2026.
Mali’s Finance Minister Alousseni Sanou recently wrote to Barrick CEO Mark Bristow to say the government “reserves the right not to renew the operating permit” for the mine and asked Barrick to start talking about the mine’s transition period.
Growing tensions over revenue division
The main source of contention is the government’s displeasure with Barrick’s suggested economic division, which would have given Mali 55 percent of the profits while keeping 45 percent for the business.
Demanding a more equitable distribution of the mine’s profits, the West African country, which owns 20 percent of the Loulo-Gounkoto complex, recently rejected Barrick’s offer.
In addition, Barrick disputes the military-led administration’s allegation that he broke a previous deal reached in September to settle their differences.
Furthermore, in an effort to increase state revenue, Mali is pushing for renegotiation as part of a broader audit and revision of mining agreements with multinational corporations.
The country has recently revised its mining code, reducing license terms from 30 to 10 years and allowing for state stakes in mining projects to increase from 20 to 35 percent.
This policy shift follows Mali’s 2020 political upheaval, which cut off international aid and limited the country’s access to regional finance markets, leaving it reliant on mineral resources to bolster its economy.
Efforts to reach a settlement
In order to keep the Loulo-Gounkoto site economically viable, Barrick, the second-largest gold miner in the world, is looking for a settlement.
In a letter dated October 14, Bristow suggested a memorandum of agreement and a financial package worth 225 billion CFA franc, or around $371 million, to extend the mine’s operational conditions.
According to Mining.com, the offer, however, was rejected by Sanou, who claimed it was “fundamentally different” from what the administration anticipated.
In the last year alone, Barrick has contributed more than $1 billion to the Mali economy as a major investor in the country’s gold industry. So as to address the mine’s contributions and settle operational disputes, CEO Bristow has traveled to Mali on a regular basis.
Impact on Barrick and Mali’s mining industry
Loulo-Gounkoto is vital to Barrick’s production, accounting for roughly 13 percent of its gold output in 2023.
Barrick would be greatly impacted by a gap in the Loulo permit because the corporation has depended on the site’s efficiency to reach its goals.
Mali, on the other hand, has vigorously implemented its mining regulations; in September, it detained four of Barrick’s local officials on suspicion of “financial crimes.”
The junta’s persistent attempts to obtain more profits from foreign businesses doing business in the nation are reflected in its uncompromising position.
