Mali’s new mining code has raised operational costs for gold companies, prompting CEO concerns about reduced investment attractiveness. Key changes include increased government stakes, higher royalty taxes, and mandatory Malian investor participation. Some companies are contemplating exit strategies, while others maintain discussions with the government to navigate the new regulations, amid record-high gold prices crucial to Mali’s economy.
CEOs of gold mining companies have expressed concerns regarding Mali’s new mining code, suggesting it needs to be revised to stimulate investment in the country’s mining sector. Introduced on August 8, 2023, the legislation mandates a 10% government stake in mining projects along with a possible additional purchase of 20% during the first two years of production. Additionally, the royalty tax has increased from around 6% to 10.5%, and companies must now allocate 35% of new projects to Malian investors, up from the previous 20%.
Gold prices, which constituted 80% of Mali’s exports in 2023, have recently soared to unprecedented levels. Expected revenues from mining companies are projected at CFA Fr750bn ($1.2 billion) for the first quarter of 2025, reflecting recent reforms in the mining sector, including the new code. However, at the African Mining Indaba, mining executives have labeled the updated regulations as detrimental to the allure of investing in Mali.
The Mali Mines Ministry has yet to provide a statement but has previously emphasized the need for a more equitable distribution of mining profits and reduced tax incentives. Jorge Ganoza, CEO of Canadian miner Fortuna Mining, stated that Mali is no longer a favorable investment location, potentially leading investors to shift their focus to other resource-rich nations in West Africa.
Resolute Mining, an Australian company facing operational challenges, indicated that the revised royalty tax would elevate its all-in sustaining costs by about $250 per ounce at its Syama mine. Meanwhile, Robex, another Canadian firm, is contemplating exiting Mali in favor of Guinea, though it is finding it difficult to sell its Nampala mine.
Despite the regulatory changes, some mining companies are still in talks with Mali’s junta regarding their operational future under the new code. Mark Bristow, CEO of Barrick, acknowledged the obstacles present while maintaining optimism about ongoing communication with the government concerning unpaid taxes and the confiscation of gold reserves. B2Gold has also disclosed intentions to invest $10 million into exploring Mali’s Fekola gold complex, following a settlement related to the 2023 mining code.
Mali has recently revised its mining code to facilitate government investment and increase local participation, which has raised concerns among gold mining companies operating in the region. The modifications include higher royalty taxes and mandatory local share allocations, which may deter foreign investment due to increased costs and decreased profitability. Gold remains vital to Mali’s economy, making up a significant portion of its exports, thus balancing profitability for mining companies and local economic benefits is crucial.
The enactment of Mali’s new mining code has prompted significant pushback from gold mining executives who argue it may inhibit investment due to increased costs and sharing requirements. While some companies are considering withdrawal or displacement to more favorable jurisdictions, others continue to seek dialogue with Mali’s government to mitigate the impact of these changes. The future of Mali’s mining sector will depend on finding a compromise that attracts investment while ensuring fair local participation in resource extraction.
Original Source: www.mining-technology.com
