MiningIR
In a significant escalation of tensions between the Government of Mali and Barrick Gold Corporation (NYSE:GOLD) (TSX:ABX), authorities have begun seizing gold stockpiled at Barrick’s Loulo-Gounkoto mining complex. The interim attachment order, issued earlier this month, prohibits the export of gold from the site and threatens to disrupt normal operations at one of Mali’s most significant mining assets.
Around three metric tons had been taken from the mining complex in western Mali on Saturday, putting the value of the gold at $245 million. In a letter to the Malian government on Monday, Barrick said the seizure meant it would now be “obliged” to temporarily suspend mining operations at the Loulo and Gounkoto mines.
This development compounds an already strained relationship, as Barrick’s gold shipments from Loulo-Gounkoto have been blocked since November 2024 over disagreements about revenue distribution. The dispute reflects broader challenges faced by international mining companies operating in Mali under the country’s military junta, which has pushed for greater state benefits from mining projects.
Impact on Barrick and Mali’s Economy
Barrick’s President and CEO, Mark Bristow, emphasized the far-reaching implications of the gold export restrictions. “The inability to ship gold not only affects our operations but has broader implications for the local economy, the 8,000 employees, and our many local service providers,” Bristow said.
The Loulo-Gounkoto complex, which has been a cornerstone of Mali’s gold production for decades, plays a crucial role in the country’s economy. Barrick has been a significant contributor to local development, with long-standing commitments to job creation, infrastructure development, and community welfare. However, if the dispute remains unresolved, Barrick warns it will be forced to temporarily suspend operations at the site—a move that would adversely affect Mali’s economy and international reputation as a mining-friendly jurisdiction.
“Barrick remains committed to constructive engagement with the Government of Mali to resolve the existing disputes amicably. As previously disclosed, we have initiated arbitration through the International Centre for the Settlement of Investment Disputes (ICSID) as a recognized mechanism to address these matters of disagreement while maintaining the integrity of existing agreements,” said Bristow.
“In parallel, Barrick continues its efforts to reach an agreement with the Mali government on a memorandum of agreement to resolve the existing disputes, redefine the partnership’s future and increase the State’s share of benefits from the Loulo-Gounkoto complex.”
Arbitration and Dispute Resolution
Barrick has already initiated arbitration proceedings through the International Centre for the Settlement of Investment Disputes (ICSID), a mechanism established to resolve international investment disagreements. Bristow underscored the company’s commitment to adhering to agreed dispute resolution mechanisms, calling the interim attachment order “unwarranted and in contravention of existing agreements.”
Simultaneously, Barrick is engaging with the Malian government to reach a memorandum of agreement aimed at resolving the dispute. This would redefine the terms of their partnership and increase the state’s share of benefits from Loulo-Gounkoto, aligning with the government’s goals to secure a larger share of mining revenues.
The situation is further complicated by the detention of several Barrick employees on what the company describes as “unfounded charges.” Barrick is actively working to ensure the release and well-being of these workers, emphasizing its commitment to the safety and rights of its workforce.
“The safety and rights of our workforce remain a critical priority,” Bristow noted.
Mali’s military-led government, which has taken an assertive stance in renegotiating mining agreements, is also grappling with broader economic pressures. The decision to block exports and seize gold stocks is part of a larger push to maximize revenue from the mining sector, the backbone of Mali’s economy.
A Precarious Precedent for Mining Companies
Barrick is not alone in facing increased pressure from the Malian government. Other mining companies, such as B2Gold Corp., have already reached settlements that include higher royalty payments and additional financial commitments to the state. However, the actions against Barrick suggest an intensifying effort by the government to secure immediate economic gains, even at the cost of operational stability.
For the world’s second-largest gold producer, the situation at Loulo-Gounkoto underscores the risks associated with operating in resource-rich but politically volatile regions. Barrick has reiterated its dedication to Mali, pointing to nearly three decades of partnership and substantial contributions to the country’s economic and social development.
What Lies Ahead?
As of January 11, 2025, the interim attachment order remains in effect, with the Malian government executing the seizure of gold stocks at the Loulo-Gounkoto site. Barrick’s immediate focus is on resolving the dispute amicably, with Bristow reiterating the company’s willingness to engage in constructive dialogue.
Despite the challenges, Barrick remains optimistic about reaching a resolution that secures the future of Loulo-Gounkoto. “We are committed to dialogue and finding a mutually acceptable resolution,” Bristow said.
However, with operations at risk of suspension, time is of the essence. The outcome of this dispute could set a critical precedent for how international mining companies navigate partnerships in Mali and similar jurisdictions moving forward.
The situation at Loulo-Gounkoto serves as a reminder of the delicate balance between national interests and foreign investment in resource-dependent economies. While Barrick seeks an amicable resolution through arbitration and dialogue, the outcome will significantly impact Mali’s standing as a gold mining hub and its ability to attract future investment.
Barrick’s commitment to its workforce, local communities, and long-term partnership with Mali will be put to the test as it navigates one of its most challenging disputes in recent history.
