Insight: How two former employees are driving Mali's hardball talks with Barrick Gold (updated)

Allied Gold

03/02/2025 14:04

(Updates story published on Feb 1 with expiry of Saturday's
deadline )

        * 
      Mali is seeking around $200 million from Barrick in back
taxes
    

        * 
      Military-led governments in Sahel are pursuing an agenda
of
resource nationalism
    

        * 
      Barrick has suspended operations in Mali after ban on its
exports, seizure of its gold 
    

  
    By Portia Crowe, Divya Rajagopal, David Lewis
       Feb 3 (Reuters) - Two former company executives with
inside knowledge of Barrick Gold's operations in West Africa are
helping to drive Mali's demands for a payment of around $200
million from the Canadian miner, according to people familiar
with the talks. 
     Mamou Toure and Samba Toure, key members of the
government's negotiating team, both used to work in Mali for
Randgold, a mining company that is now part of Barrick.  ABX.TO 
Mali's military-led government, which in December seized three
metric tons of gold from Barrick worth about $245 million, had
given the miner until Saturday at midnight to respond to its
demands, according to two sources familiar with the situation,
but the deadline passed without either side announcing a
breakthrough. 
    Mali wants Barrick to pay 125 billion CFA francs ($199
million) in back taxes, one of the sources said: if a deal is
finalized, it would return the seized gold and release four
Barrick executives detained since late November. 
Barrick has publicly rejected the charges against its employees,
without specifying what they are. According to a court document
reviewed by Reuters, they include money laundering and financing
of terrorism.
     Barrick did not answer questions about the status of the
talks and Mali's mines ministry did not respond to a request for
comment. 
     The dispute has ramifications for global miners and other
foreign investors who poured billions of dollars into West
Africa and are now forced to play by a new set of rules as the
military governments of Mali, Niger and Burkina Faso seek a
bigger share of mining revenues. 
    "The standoff with Barrick is a snapshot of just how far
military-led governments in the Sahel are willing to go to
compel foreign operators to comply with new regulations that
align with their pursuit of resource nationalism," said Beverly
Ochieng, senior analyst for Francophone Africa at Control Risks.
    Reuters spoke to more than 20 people - including mining
executives, consultants, diplomats and people with direct
knowledge of the talks - to form a picture of the negotiations.
The sources requested anonymity because of the sensitivity of
the situation.
    The two Toures are among a small group of key players on the
Malian side, which also includes junta leader Assimi Goita and
Minister of Finance and Economy Alousseini Sanou, according to
nine people familiar with the matter. 
    The men, while they share a surname, are not related. Samba
Toure, the older by decades, was the more senior of the two at
Randgold, where he was West Africa operations director. Mamou
was underground manager for the Loulo mine. 
    But it is Mamou who is now the more influential negotiator
for Mali, due in part to his close relationship to the powerful
finance minister Sanou, the sources said. 
    It was Mamou's consultancy Iventus that won the contract to
audit foreign mining companies in Mali, which led to a new
mining code in 2023 and renegotiations of the miners' contracts.
Samba now works for him at the consultancy.
    "It's Mamou who is currently the boss," said one person who
formerly worked with them both, adding that Samba's experience
and technical knowledge was nevertheless crucial in
decision-making. "The decisions come much more from Samba than
from Mamou."  
    In response to Reuters' detailed questions, Mamou said that
for decades gold production had not benefitted the people of
Mali as it should have. Mali is Africa's second-largest gold
producer. 
    "It is only natural that the state asks for a
rectification," he told Reuters. "The state has made a great
effort to reach an agreement, which is why all the other
companies have reached an agreement with the state."
    Samba Toure did not respond to a request for comment.
     
    ACRIMONIOUS TALKS
    The military governments in Mali, Niger and Burkina Faso are
using legal disputes, arrests and nationalisations, as well as
threats to deepen their ties with Russia, to assert greater
control over their gold and uranium wealth. After seizing power
in 2020, Mali's junta pledged to scrutinise its mining sector so
the state would benefit more from gold prices running at
all-time highs.
Some Western miners, like Canada's B2Gold  BTO.TO , reached an
agreement swiftly. Others, like Australia's Resolute  RSG.AX ,
whose CEO was detained while in Mali for talks, took longer. 
B2Gold told Reuters it was now proceeding with planned
investments this year at its Fekola gold complex after reaching
the deal. Resolute on Thursday told an investor call that it
hoped its deal paved the way for better collaboration with
Mali's government as it develops the Syama mine.
    Ochieng of Control Risks said the negotiations by
governments in the region did not mean Western operators were
unwelcome. "Several Western mining companies have been allowed
to expand operations and take on new assets provided they comply
with the latest regulations and taxation demands," she said.
     Mali's relations with Barrick, however, deteriorated as
acrimonious talks dragged on last year. After authorities
arrested four Malians working for Barrick in September, the
company paid 50 billion CFA francs ($80 million) and they were
released. But Mali, which is seeking a total of around $350
million, demanded further payments.
    Mali represents 14% of Barrick's gold output and the company
generated $949 million in revenue from its operations there in
the first nine months last year. 
    In early November, Bristow told Reuters the company had
offered Mali 55% of the economic benefits from its
Loulo-Gounkoto mine complex - similar to an agreement the miner
struck with Tanzania about five years ago. 
But when Barrick did not pay a second tranche, Mali accused the
company of breaking its commitments and demanded the remaining
sum be paid at once rather than in tranches. It began blocking
Barrick's exports in early November.
    Discounting VAT credits, Mali says Barrick has 125 billion
CFA francs left to pay. 
    When no payment came, four employees were detained again in
late November and Mali issued an arrest warrant for Barrick CEO
Mark Bristow on Dec. 5.
Nevertheless, contacts continued behind the scenes. One source
who spoke to Barrick senior management told Reuters on Dec. 6
that Barrick was close to paying a second tranche of 50 billion
CFA. But no payment was made and the conversations stalled.
Formal talks resumed on Tuesday.
    Freddie Brooks, metals & mining analyst at BMI, a
FitchSolutions company, said that under Bristow's leadership
Barrick had probably the highest tolerance for operational risk
of any major miner.
    "If they can't negotiate a compromise with Mali's military
junta, it won't be for lack of trying," he said.  
       
    CLASHES WITH BRISTOW    
Samba Toure quit Randgold around nine years ago after a quarrel
in an online meeting with Bristow, who was CEO of that company
at the time, according to someone who has worked with both
Toures.
The rift deepened after Samba handed in his resignation and was
not allowed to dispose of his vested Randgold share options,
domiciled in London. 
    Mamou Toure had already left Randgold in 2015, following a
dispute with Bristow over the use of foreign contractors, one of
the sources said.
    Barrick did not respond to a request for comment on the
circumstances of the Toures' departures.
    When the government announced its plans to audit the mines,
Mamou won the consultancy contract with his firm Iventus Mining.
It was Samba Toure who directed the audits, two sources said.
    After Mali created a state-owned mining company, SOREM, in
2022, Samba was named chairman of the board, with Mamou
appointed as a director. 
The influence of the Toures is not unchallenged, however. Last
summer, junta leader Goita grew frustrated with the negotiations
and brought in the director of state security, Modibo Kone, one
of the five colonels-turned-generals who lead the junta, one
source said. A second source confirmed Kone's involvement in the
talks.
    On at least one occasion, the finance minister has also
taken over negotiations and instructed Mamou to stand down after
he went too far in his demands, according to one source familiar
with the talks.
Five sources said that the mines minister, a technocrat with no
ties to the military, has been sidelined. However, Mamou denied
that, noting the ministry has two representatives on the
negotiating commission. The commission takes its orders from the
mines ministry as well as the finance ministry, he said.
     Mali's finance ministry and presidency did not respond to
requests for comment. It was not possible to reach the state
security service.
  
     
    SPECIAL FORCES RAID 
With exports banned and Barrick's mines producing up to half a
ton of gold weekly, stockpiles were rising in its secure "gold
room" at the Loulo-Gounkoto mine complex.
    As of Dec. 27, Barrick held just over 3 tons in its vaults,
according to a Jan. 2 court order seen by Reuters, which
authorised its seizure. 
    At mid-morning on Jan. 11, a helicopter landed at the mine
complex's landing strip unannounced. Four special forces
soldiers, a customs agent, two officers of the state mining
directorate, and other plainclothes officials disembarked and
presented paperwork to Barrick staff authorising them to seize
the gold, one of the sources said.
    "They shipped a first quantity and came back in the evening
for a second shipment," the source said, adding that it was all
over by 7:00 pm.   
For now, the gold seized from Barrick's mines is sitting in the
vaults of the state-owned Banque Malienne de Solidarite in
Bamako. The bank declined to comment. 
     Barrick, which confirmed the seizure of the gold, says it
has suspended operations at Loulo-Gounkoto. 
The Jan. 2 order said the seizure was a preventative measure as
part of the charges of money laundering and other unspecified
financial crimes that have been levelled at Bristow and other
Barrick employees under Mali's laws.
    Barrick is resisting the government's demand to migrate to
the new 2023 mining code largely because of increased taxes
under the code, two sources said. 
  
    Pending next year is the renewal of Barrick's mining permit.
The government has signalled it could refuse it.
One source, who has consulted for the Malian government, said
the government was seeking leverage for that negotiation, while
the company wanted to clinch a long-term renewal under
favourable terms.
    "I think they don't trust each other, but no one has an
interest in a break-up," the person said. 
    Some investors, however, are anticipating a tough road ahead
for Barrick in Mali, including the possibility the company could
lose its assets. 
    "The market has already factored in all the risks on Barrick
shares, and the possibility that not much of production is going
to come from Mali anytime soon," said Martin Pradier, materials
analyst at Toronto-based Veritas Investment Research
Corporation, which covers Barrick.
    ($1 = 626.7500 CFA francs)

(Additional reporting by Tiemoko Diallo and Fadimata Kontao in
Bamako; Writing by David Lewis and Portia Crowe; Editing by
Silvia Aloisi, Veronica Brown and Daniel Flynn)
((mailto:Portia.Crowe@thomsonreuters.com; +221785893440;))