Miners navigate high risks, ransoms in West Africa

Mali’s military government is trying to arrest the CEO of the world’s second-largest gold company while the junta in Niger has tightened its stranglehold on a French state-owned uranium mine. African dictators are ratcheting up the risk for Western miners.

A combination of resource nationalism, coups and jihadist-linked terror is making West Africa an increasingly difficult region to navigate for Western mining companies.

On Monday, Barrick Gold (TSX: ABX; NYSE: GOLD) warned that it will suspend operations at its Loulo-Gounkoto mine in Mali if shipments of gold remain blocked. “Local operating conditions have deteroriated significantly with employees imprisoned without cause and gold shipments blocked,” the company said in a release Monday. “If shipments remain suspended, Barrick will be compelled to suspend operations, further impacting the viability of this critical economic driver for Mali.”

Cash-strapped military juntas in Mali, Burkina Faso and Niger, three of the key countries in Africa’s volatile Sahel region, are trying to negotiate new mining contracts to support their regimes financially and to give them the upper hand in a more than decade-long fight against terrorist groups affiliated with al-Qaeda and the Islamic State in the Greater Sahara.

Mali introduced a new mining code last year to increase the government’s stakes to 35% from 20% and abolished certain tax exemptions.

Tensions flared in early December when Mali issued an arrest warrant for Barrick CEO Mark Bristow in a dispute over taxes and how to share the wealth from the company’s Loulu-Gounkoto mine. In October, Barrick paid US$85 million to the government amid ongoing negotiations but denied allegations by the Malian Ministry of Mines and the Finance Ministry that it had not honoured its commitments.

The warrant for money laundering follows the regime’s detention in November of four Barrick employees.

Mali also held Resolute Mining’s (ASX: RSGl; LSE: RSG) CEO Terry Holohan and two other employees for 12 days until the company agreed to pay the government about US$160 million in a tax dispute.

“I view it as a form of ‘kidnapping diplomacy,’” Héni Nsaibia, an expert on the Sahel region at the Armed Conflict Location & Event Data Project (ACLED), said in an interview from Sweden.

“There will be demands from the military regimes on whoever wants to be present in the country and the events around Barrick speak to that. These are juicy sums that are being demanded for unsettled amounts. Companies are literally being pressured to release funds or to buy themselves out; you have executives that arguably have been wrongfully detained.”

In Niger, which has been under military rule since a coup in July of last year, France-based uranium miner Orano has lost operational control of its Somair mine. Orano suspended Somair’s production in October after months of interference by the government.

In June Niger withdrew a mining permit for Orano’s Imourare project and a month later revoked the mining licence for GoviEx Uranium’s (TSXV: GXU; US-OTC: GVXXF) permit on the feasibility stage Madaouéla project, one of the world’s largest uranium developments. GoviEx filed an arbitration claim in early December through the World Bank’s International Centre for Settlement of Investment Disputes.

Terrorism, Russia, Turkey, Iran

There have been nine successful military coups in the Sahel since 2020 and “at least the same number of failed attempts, largely in Francophone states,” according to British thinktank Chatham House. At the same time, insecurity in the region has intensified with insurgencies by terrorist groups.

Chatham House reports that 43% of global terrorism deaths in 2022 were in the Sahel — up from less than 1% in 2007.

“Despite its economic potential, the Sahel accounts for more armed conflicts and crisis than any other region in the world,” it said in a recent working paper.

“Jihadist fighters are widening their reach, edging into western Mali, entering zones south of Niger’s capital Niamey, and spilling across borders into the territory of West Africa’s coastal states,” Alex Vines, Africa director at Chatham House, said in the report. “Militant Islamist violence in the Sahel has been growing for the past decade and has increased by 140% since 2020 and by more than 40% in 2022 alone — it represents 60% of all such violence in Africa. This escalation has displaced more than 2.5 million people and killed more than 8,000 in 2022.”

In Burkina Faso alone, groups, including al-Qaeda-affiliated Jama’at Nasr al-Islam wal Muslimin (JNIM), were responsible for more than three-quarters of the violence and related deaths in the last five years, the report noted. An attack in August in Barsalogho in central Burkina Faso killed about 200 people, including two humanitarian workers.

According to ACLED, an international non-profit group that collects data on violent conflict and protest around the world, last year was a record year for violence in the region since the security situation first started to deteriorate in 2012.

“This has been going on for over a decade now and for that reason has become extremely protracted. We don’t see any peace and there is an ongoing brutalization of the conflict due to the various actors — al-Qaeda; mercenaries from Russian paramilitary groups; and state forces themselves, which are abusive.

“All this multi-directional violence is contributing to the bad security situation in the central Sahel and in particular in Mali, Burkina Faso and Niger, which are the countries that are primarily affected by jihadist insurgency.”

The insurgent groups aren’t small anymore, either.

“Ten years ago they were small and medium-sized and now they are raising insurgent armies in an accelerated way because they are pretty successful in getting support from the local population,” Nsaibia says.

“You have military regimes mobilizing militias, but these fledgling militias, whether in Burkina Faso or Mali, don’t stand a chance against the jihadists and become cannon fodder when they face the battle-hardened and better-armed jihadist fighters.”

Some military juntas have also pivoted to countries like Russia, Turkey, Iran for help — turning away from international agencies and Western governments. In Mali the state has hired mercenaries from the Kremlin-linked Wagner Group to shore up their rule.

Little sympathy

Remi Dodd, an analyst at geopolitical consulting group RANE, says if these trends persist, which he expects they will, Western miners will need to make decisions about whether to exit Mali, Burkina Faso and Niger.

“The Sahel’s security environment is very degraded and has worsened over the past year, and that is likely to persist into 2025,” he said in an interview from London. “As a consequence, we may see Western miners becoming less and less willing to maintain their operations in the Sahelian strip, especially in Mali, Burkina Faso and Niger.”

For their part, the military-backed regimes have little sympathy for Western miners, he said.

“The juntas in power right now are not troubled with these Western companies facing challenges and they are not necessarily opposed to them leaving the country,” he said. “The juntas want to diversify relationships with other countries like Russia, Morocco and Turkey, so if Western miners exit these countries, we could see non-Western miners increasing their involvement in the region.”

As for Chinese miners, Dodd noted, they are unlikely to fully fill the vacuum should Western miners leave, as they tend to be more risk averse than their counterparts in Russia, and security threats would be a “major stumbling block.”

“It’s really difficult to be optimistic,” says Nsaibia. “You have regimes that are inexperienced in governing but also facing precarious economic situations and the mining sector has always been an easy way to tap into or nationalize to get hard currency fast.”