Analysis: Mali arrests, Niger site seizure rattle Western miners

Perseus Mining

11/12/2024 11:45

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      Detention of company officials spooks operators,
financiers
    

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      Production continues, but investment could shrink
    

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      Mali secures extra $635 mln after audit - Reuters
calculation
    

  
    By David Lewis, Melanie Burton and Portia Crowe
       Dec 11 (Reuters) - The arrest of mining executives in
Mali, threats by Burkina Faso's junta to strip permits and the
seizure of a French-run uranium site in Niger have unsettled
Western miners operating in West Africa and could limit further
investments.
    Day-to-day production in Mali and Burkina Faso has so far
been largely unaffected.
    The escalation is expected, however, to hit firms seeking
finance and insurance - curbing supply growth in Africa's engine
of gold output, more than a dozen people, including mining
employees, financiers, insurance providers and government
sources, told Reuters.
    The push by Mali, Burkina Faso and Niger's military
governments to renegotiate terms with mining companies and gain
a bigger share of revenues has coincided with a surge in gold
and uranium prices. 
    It has also followed a series of coups, starting with Mali
in 2020, and the three countries' shift towards Russia and away
from their traditional backers France, the United States and the
United Nations.
    Moscow has strengthened its military and diplomatic presence
in the region. There is no evidence yet Russian companies have
positioned themselves to take over mining assets, but analysts
said that could not be ruled out. 
        "We wouldn't invest in Mali now," a Western fund manager
told Reuters, adding record gold prices had made miners
operating in the Sahel an obvious target for juntas. The fund
manager asked not to be named. 
    Over the last decade, companies keen to profit from West
African gold countered the spreading threats posed by Islamist
militants expanding from their initial stronghold in northern
Mali by working with governments to beef up security.  
    But relations have soured since the coups.
    Mali, Africa's second biggest gold producer last year,
according to the World Gold Council (WGC), carried out an audit
of operations and rolled out a new mining code, triggering talks
over new agreements and outstanding tax bills. 
    Arrests of staff from Australia's Resolute Mining  RSG.AX 
and Canada's Barrick Gold  ABX.TO  by military authorities have
gathered pace since September. Mali issued an arrest warrant for
Barrick CEO Mark Bristow last week. 
    The country has so far received or been promised over $635
million in additional tax payments from various companies,
Reuters calculations show.
    Four Barrick Gold employees are detained in Mali's capital
Bamako pending trial. Barrick, the world's No.2 gold miner, said
in November it was seeking to strike a deal.
        Barrick did not reply to requests for comment for this
story. 
        
    CHANGED EQUATION
    Home to vast, untapped gold reserves, mining investment in
West Africa has surged in the last 15 years, though Mali, Niger
and Burkina remain among the world's poorest countries.
    Mali's gold output has more than doubled to 105 metric tons
as of last year from 2010 levels, WGC data show. With Burkina
Faso and Niger, it accounts for a quarter of the continent's
gold production.
    Mali's junta pledged to review mining contracts in 2020.
Some companies, including B2Gold, signed new agreements with the
government. Last month, Resolute Mining made $100 million in
payments to Mali after its chief executive was detained during a
visit. Mali accuses Barrick of owing up to $500 million, which
Barrick denies.
        A Malian government source said the new mining code
seeks to address inequalities in contracts with companies
without "killing the industry". Mali's mines ministry did not
immediately reply to a request for comment.
        In a sign of unease over Mali, Canada's Robex Resources
 RBX.V  said in September it was looking to sell its Nampala
mine in Mali but it had not received any reasonable offer. 
    "Due to the geopolitical context for investments in Mali,
the market of potential buyers is currently very limited." Robex
did not respond to requests for further comment. 
    Insurers are more cautious about the risks they underwrite,
said Gallagher's Racheal Tumelty, head of Political Risk
Australia, who has previously brokered insurance for projects in
Mali and other West African countries.
    Premiums for some West African countries had almost trebled
as of late 2023 compared to 2019, she said.
    
    TAKING BACK PERMITS
    Challenges in the Sahel did not apply to the wider region of
West Africa, Jeff Quartermaine, CEO of Perseus Mining  PRU.AX ,
said, so events in Mali had no impact on the Australian-listed
miner's operations in coastal Ivory Coast or Ghana. 
    But others see warning signs for the industry.
    In Niger, where the junta tore up a defence agreement with
former colonial power France shortly after coming to power last
year, authorities have taken control of French nuclear fuels
company Orano's Somair uranium mine, the company said last week.
 
    London-listed Endeavour Mining  EDV.L  sold two of its gold
mines to the Burkina Faso government for $60 million, having
flagged an initial agreement of $300 million, company statements
showed. Endeavour declined to comment about the discrepancy. 
    Burkina Faso junta leader Ibrahim Traore said in July he
would withdraw permits from miners headquartered in countries
that did not supply military equipment.
    A senior official working for a mining company in West
Africa said the authorities were implicitly telling Western
miners that they could now turn to Moscow if they needed other
mining partners.
    Short term, analysts said they expected juntas to continue
squeezing the companies already in the region.
    "I don't think the miners are reassured. A couple of years
down the line, they might find themselves being told, 'that is
not sufficient'," said Vincent Rouget, an analyst at global risk
consultancy Control Risks, which advises miners in the region.

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Mali and Burkina Faso are among Africa's top gold producers    https://www.datawrapper.de/_/maSjw/
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 (Additional reporting by Felix Njini in Johannesburg and
Tiemoko Diallo in Bamako, editing by Silvia Aloisi, Veronica
Brown and Barbara Lewis)
 ((david.lewis2@thomsonreuters.com; Dakar Newsroom +221
338645076; Reuters Messaging:
david.lewis2.thomsonreuters.com@reuters.com))