2024-11-25 15:50:00
Who will be next? The twelve days spent in detention in Bamako by the CEO of the Australian company Resolute Mining sound like a warning to foreign mining groups operating in Mali and throughout the Sahel. Briton Terence Holohan and two other employees of the Resolute company, which operates the Syama gold mine in southern Mali, were released on Wednesday November 20 after the conclusion of an agreement providing for the payment of 160 million dollars to the Malian government to resolve a financial dispute.
At the end of September, several senior Malian executives from the Canadian major Barrick Gold, also in dispute with the country’s authorities, also spent several days in prison. “The environment is changing very quickly. Companies must be extremely careful in analyzing risks and preparing for all eventualities”says Christian Mion, mining sector expert at EY.
These episodes illustrate the maximum pressure exerted by the junta in power in Bamako to make better use of revenues from the mining industry. In 2023, President Assimi Goïta introduced a reform of the mining code allowing the State to take up to 30% of the shares in new projects and reducing the tax advantages of foreign companies.
The government demands that existing contracts be renegotiated, regardless of agreements made with previous administrations. A demand expressed against a backdrop of continued rise in gold prices, of which Mali is the third African producer and which constitutes 75% of its export earnings.
“Finance military campaigns”
“As we generate a lot more liquidity due to the price of gold, one of the unfortunate consequences of this is that people are looking to get a bigger piece of the pie”Resolute CFO Chris Eger remarked in October during a conference call on quarterly results. “We see it across Africa, particularly in West Africa”he observed.
The context is especially tense in the Sahel countries undermined by terrorist violence and whose military regimes are short of money. “Governments need more revenue to finance military campaigns against jihadist groups”deciphers Tiffany Wognaih, senior partner for Africa at the international consulting firm JS Held. For the juntas in power, it is also a question of“encourage resource nationalism in order to gain favor with their respective populations”underlines the expert.
Thus, in Burkina Faso, Captain Ibrahim Traoré, the strong man of Ouagadougou, continues to demand greater sovereignty for the country in the gold sector which represents 12% of its gross domestic product (GDP). In July, the mining code was the subject of a surprise revision, aimed at increasing the State’s share in extractive projects.
But for multinationals, the signals really turned red at the beginning of October when the Burkinabé leader threatened to withdraw their operating permits. The announcement caused a wave of panic on the stock market. The Canadian companies Iamgold, Fortuna Silver Mines and Orezone Gold saw their valuations plunge, as did the Australian West African Resources.
Turkey and Russia “invited”
These expeditious methods risk dampening for a moment the enthusiasm of potential Western investors. “Already today, there is almost no exploration in Burkina or Malireports on condition of anonymity a person familiar with the sector active in the region. It’s complicated to commit tens of millions of euros with the risk of seeing the rules of the game change along the way. »
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Especially since political and regulatory instability adds to a very degraded security situation. In Burkina Faso, jihadist attacks have led to the closure of several mines as well as numerous artisanal gold mining sites in recent years. For the moment, the threats of withdrawal brandished by Captain Traoré have not been carried out.
In Niger, on the other hand, the general in power, Abdourahamane Tiani, has already taken action. As a result of the divorce between Niamey and Paris, the French uranium specialist Orano was stripped of its operating permit for one of the largest uranium deposits in the world, Imouraren, in June. The French group, which announced at the end of October that it would suspend production at its Nigerien subsidiary, is however not the only one targeted. The Nigerien junta also withdrew from the Canadian group GoviEx its operating permit for a large uranium deposit, near Arlit.
Other countries could try to take the advantage, such as Turkey with which Niger signed a cooperation agreement in the mining sector at the end of October. Or even Russia whose companies have been “invited to come to Niger” by the Minister of Mines, Ousmane Abarchi, in an interview given to the Russian public agency Ria Novosti in mid-November.
In Senegal and Ivory Coast
In neighboring states, the context also appears favorable to a gradual restructuring of the investor landscape. Western companies should not withdraw overnight. “The time spent selling these resources is long and demand is low given the high operating risks”underlines Tiffany Wognaih.
But he is « plus probable » that in the future interest in the sector comes from “ non-Western actors such as Russia »she emphasizes. An economic as well as geopolitical realignment in countries whose military regimes, supported by Moscow, proclaim their desire to diversify their partners.
The Sahelian juntas are not the only ones to question operating rules considered unbalanced. In Senegal, President Bassirou Diomaye Faye launched an audit of the mining and oil and gas sector in April, the day after he was sworn in. An exercise which, according to him, could lead to a renegotiation of certain contracts so that they benefit more local populations.
In Ivory Coast also, the government has announced that it wants to reform its mining code. The challenge is to increase revenues and the local value of the sector while its numerous resources (gold, manganese, lithium, etc.) are attracting increased interest from investors.
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