Mali takes hard line in Barrick dispute, but analysts expect settlement

Mali and Barrick Gold Corp. will likely hammer out an agreement after a protracted dispute over taxes and royalties, despite the West African country's hard-line strategies, experts told S&P Global Commodity Insights.

Mali is seeking at least 300 billion CFA, or over $500 million, from Barrick as part of a broader push to collect more revenue from the mining sector. Mali settled a similar dispute over mining benefits with B2Gold Corp. in September, but negotiations between Barrick and the government have yet to produce results.

"They're not just going to push [Barrick] away," said Leonard Mbulle-Nziege, a South Africa-based senior political analyst at Concerto, a public affairs firm. "Yes, they're going to put pressure on [Barrick] and see if they can get what they believe is owed to them, even if it's not the whole amount."

In addition to the tax dispute, Mali arrested Barrick employees over alleged financial crimes, and the government reportedly intends to let the permit for the Loulo-Gounkoto` concession lapse when it expires in February 2026. Barrick owns 80% of the mining complex, which produced 683,750 ounces gold in 2023, according to S&P Global Market Intelligence.

Mali's recent actions risk dampening investment in its mining sector amid shifting geopolitics and the rise of Russia as a willing partner in the Sahel region, analysts said.

Mali's strategy reflects the transitional administration's need to secure funds quickly, said Ryan Cummings of Signal Risk, an Africa-focused risk management firm.

"This might be a direct means of strong-arming the likes of Barrick into negotiations, where they will provide the country some form of a payment as a means of continuing operations," said Cummings, a director for Signal Risk.

Mining in spotlight

Assimi Goita became Mali's interim president after seizing power in 2021 from a democratically elected government. In 2023, Mali launched a new mining code, which allowed the country to increase its ownership in mining projects to 35% from 20%.

That same year, nonferrous exploration budgets plunged 46.1% year over year to $83 million, according to Market Intelligence data, a possible sign that the new code unnerved investors. Planned exploration budgets for 2024 dropped to $72 million, according to Market Intelligence's tally.

Goita's transitional government hopes to gain credibility with its citizens and fill fiscal holes created in part by military spending, risk analysts told Commodity Insights. Previous governments had taken a softer approach to the mining sector, and this led to the perception that miners were not paying enough to extract the country's resources, analysts said.

Barrick and Mali had reached a tentative agreement in September over sharing additional financial benefits from the miner's operations in the country. But Mali hit Barrick with a $500 million tax bill in October and accused the miner of not living up to the agreement, according to media reports.

Barrick denied the allegations in an Oct. 24 statement and said the company had paid $85 million as part of the negotiations. "Barrick remains committed to finding a mutually acceptable solution to the current impasse in the interest of all stakeholders," the miner said.

Mali's leverage

Mali's actions are an opportunistic power play, said David Harquail, chair of streaming and royalty giant Franco-Nevada Corp.

Harquail called the Mali situation "humbling" for Mark Bristow, Barrick's president and CEO. Barrick, under Bristow, has long sought to partner with host governments and fairly share mining cash flows to forge stable operations in difficult jurisdictions.

"[But] the partners he is dealing with have changed. The new leaders have no history" with the mining industry, including Barrick, Harquail said.

Still, the miner had successfully negotiated a settlement in a similar tax dispute with Tanzania, and country-risk experts said they expected something similar to play out in Mali.

Experts pointed to Mali's agreements with other companies such as B2Gold as a sign that the government will ultimately want to settle the Barrick dispute.

Clive Johnson, B2Gold president and CEO, was not available for an interview but responded to emailed questions, saying Mali and B2Gold "worked hard" to make sure Mali shared equally in the benefits of its Fekola gold mine.

"Mali's governments have been excellent partners of B2Gold, and our investment in the country provides tremendous benefits to both governments and local communities," Johnson said.

Barrick declined to comment ahead of its third-quarter earnings release. Mali's mining ministry and presidential office did not respond to requests for comment.

Russia's growing influence

Mali, a former French colony, has turned its back on traditional partners such as France and the US and has sought closer relations with Russia, analysts told Commodity Insights.

"There is a political imperative to it," said Mbulle-Nziege, who also described Mali as using strong-arm tactics. "They've taken a very anti-West agenda, where they're saying, 'OK, you know what? These are our resources. You're going to exploit them in the way that we want you to and ... we're going to benefit.'"

To fight an insurgency largely in Mali's north, Goita has relied in part on Russian mercenaries from the Wagner Group, experts said. In June 2023, the US Treasury Department sanctioned individuals and companies working with Wagner for illicit gold dealings that fund the group's operations in Africa.

Mali and other governments might see Moscow start to take a larger role as Russia starts to bring its own capital and mining expertise into the country, political risk analysts said.

Russia has agreed to build a gold refinery in Mali, opening the door to fresh competition for incumbent miners such as Barrick. "Russia is increasing [activities] outside of the military assistance," Cummings said. "[It's] also moving into the extractive space, or at least posturing to move into the attractive space."

The Kremlin could not be reached for comment.

Risk analysts said they did not expect Mali to abandon partnerships with well-heeled miners such as Barrick, but the country could become less dependent on them. But in taking a hard-line approach against miners, Mali risks alienating industry and investors, who may avoid or pack up in the face of sector instability, experts said.

"It's quite a high-risk game," Cummings said. "But I think it speaks to the desperation of the Goita administration."