Mali’s new mining law, raising local ownership stakes and taxes, has deterred investment from gold mining companies. Executives warn it may lead to a decline in new mining projects amid rising operational costs. Tensions between the government and key investors, such as Barrick Gold, exemplify the challenges facing Mali’s mining sector.
Mali’s newly implemented mining law has raised concerns among gold mining executives regarding its potential impact on investment. The law increases the required divestiture for mining companies from 20% to 35% for local investors and raises royalty taxes from 6% to 10.5%. These changes have made new mining projects economically unviable and discouraged further investment in Mali, prompting some executives to reconsider their operations in the country.
During the African Mining Indaba in Cape Town, gold company CEOs expressed that although gold prices have soared, Mali’s enhanced state interest and higher taxes deter substantial investment. They indicated a growing acknowledgment among some government officials that the legislation is overly punitive and that a revision of tax requirements could be necessary. They highlighted a significant risk of gold companies reallocating investment to more favorable regions if conditions do not improve.
Mali’s government has enforced these new mining regulations aggressively, impacting its relationships with major investors, including Barrick Gold. The company’s Loulo-Gounkoto mine was recently closed following the seizure of its gold reserves and subsequent detentions of staff, exemplifying the friction arising from the new laws. Barrick’s CEO now faces legal challenges within Mali, resulting from this discord.
Jorge Ganoza, CEO of Fortuna Mining Corp, mentioned his reluctance to invest in Mali, indicating a shift toward opportunities in neighboring countries instead. He emphasized that insufficient investment could drastically reduce the operational lifespan of existing mines. Several companies, including Resolute Mining, are evaluating the financial impact of the tax hike, with increasing operational costs projected.
Some companies continue negotiations with Mali’s junta regarding their future operations in the region, including Resolute Mining, which recently negotiated the release of imprisoned executives. However, other companies like Robex are reassessing their positions, as indications show a move towards more favorable mining jurisdictions. Barrick’s CEO acknowledged existing challenges with the government but remains hopeful about maintaining dialogue about future projects in Mali.
Mali is the second largest gold producer in Africa, and gold mining is crucial to its economy, constituting 80% of the nation’s exports in 2023. The mining industry has faced significant regulatory changes that impose increased local ownership requirements and heightened taxation, which aim to maximize profitability for the state. However, these adjustments have provoked backlash from foreign investors, raising concerns about the viability of mining investments in Mali. The current political climate, characterized by a junta-led government, complicates relationships with international investors, as seen in the recent tumult involving Barrick Gold.
The implementation of Mali’s new mining law has created significant barriers for foreign investment in the country’s essential gold sector. CEO feedback indicates a pressing need for the government to reassess these rules, particularly regarding ownership stakes and taxation measures, to foster a more investment-friendly environment. Failure to do so risks losing investors to competing nations, potentially jeopardizing Mali’s economic stability, heavily reliant on gold exports.
Original Source: www.timeslive.co.za
