The Government of Mali is going after Barrick Gold Corp (TSX: ABX) (NYSE: GOLD) owes the Government of Mali approximately $300 billion CFA (USD$512 million) in outstanding taxes and dividends, according to a Thursday report from Reuters.
The conflict has resulted in Mali briefly detaining four Barrick gold staff members. Barricks said in late September that it had formed an agreement with the government to fix the issue.
The government seeks to direct a larger portion of revenues into state coffers under a new mining code. This code could increase the Malian state and private interest in projects from 20 per cent to 35 per cent. It also aims to reduce tax breaks and boost the number of Malians in management roles.
Mali has already begun renegotiations with firms like B2Gold Corp (TSE: BTO) (NYSE-AMERICAN: BTG), Resolute Mining (ASX: RSG) (LON: RSG), and Allied Gold (TSE: AAUC) (OTCMKTS: AAUC). Barrick, which holds an 80 per cent stake in the Loulo-Gounkoto mines, faces a bill for retroactive tax adjustments and unpaid dividends from 2020, 2021, and 2022.
A senior official from another mining company in Mali said the government believes Barrick owes up to 500 billion CFA.
“We are still in the process of negotiation and will let you know once the agreement is settled,” said a Barrick spokesperson.
In its 2023 annual report, Barrick stated that Malian authorities issued tax collection notices in late November 2023 for approximately USD$417 million, tied to VAT credit balances previously used to offset taxes and royalties. Barrick argued that the tax bills lacked merit, but confirmed payment of USD$17 million to secure a six-month stay on enforcement.
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African governments use coercion, threats to draw big money
A senior official from another mining company reported hearing that Barrick plans to make a payment of USD$300 million to USD$350 million to the government, although the source did not provide further details. Barrick declined to comment. CEO Mark Bristow recently stated that the company aims to expand its presence in West Africa to ensure the long-term sustainability of its Loulo-Gounkoto operation.
The Loulo-Gounkoto complex currently holds gold reserves estimated at 6.7 million ounces, part of a measured and indicated resource totaling 9.1 million ounces. The operation produced 683,000 ounces of gold in 2023 and is on track to meet its production guidance for both the current quarter and the year.
Mali is not alone in its pursuit of a larger share of revenues from the continent’s mineral resources. In neighbouring Burkina Faso, the junta-led government recently announced plans to revoke permits from some foreign firms. Similarly, Niger’s military government has also taken steps to revoke permits.
Sources close to the negotiations in Mali indicated that the junta employs a combination of coercive tactics, including the arrests of local staff and threats to revoke mining licenses, to pressure mainly Western firms for increased payments. President Assimi Goita emphasized last year that investors must either accept Mali’s new mining rules or exit the country.
Speculation has intensified regarding the possibility that any permits stripped from existing operators might be granted to Russian firms, particularly since Mali has sought Russian military support against Islamist militants. However, so far, this has not occurred. One source familiar with the situation confirmed, “The purchase of Barrick assets in Mali is not on the table.”
joseph@mugglehead.com
