Barrick, Mali exchange shots in US$500M tax dispute

Barrick Gold’s (TSX: ABX; NYSE: GOLD) negotiations with Mali’s military government appear to have stumbled after both sides issued claims about a Sept. 30 preliminary agreement.

The West African country’s junta, which has been in power since a 2021 coup, said Oct. 8 that Barrick owed it US$500 million in back taxes and dividends from its Loulo-Gounkoto mines. It repeated the claims and said Barrick had failed to live up to the end-of-September deal, the gold company said on Thursday.

Toronto-based Barrick, the second-largest gold miner by stock market value, paid the government US$85 million early this month as per the negotiation framework and continues to engage with officials to sign a memorandum of agreement, it said in a release.

“Barrick denies the allegations made by the Malian Ministry of Mines and the Finance Ministry that it had not honored its commitments made under an agreement designed to achieve a more equitable distribution of mineral resource exploitation to the benefit of all stakeholders,” the company said.

Shares in Barrick Gold fell 2% in Toronto on Thursday to close at $28.15 apiece, valuing the company at $49.3 billion.

New code

Barrick said the memorandum of agreement would include an increase in the state’s share of the economic benefits generated by the Loulo-Gounkoto complex.

The government issued a new mining code last year allowing for increased royalties and up to 35% state ownership of projects. The leaders have been pressing for more financial concessions from Western gold producers such as B2Gold (TSX: BTO; NYSE-A: BTG) with its Fekola mine, Allied Gold’s (TSX: AAUC) Sadiola and Resolute Mining’s (ASX: RSG; LSE: RSG) Syama.

In 2023, Barrick produced about 4.05 million oz. of gold globally. The Loulo-Gounkoto mining complex in Mali accounted for roughly 10% of this production — 405,000 ounces. Barrick holds an 80% stake in the complex, while the government owns the remaining 20%.

Barrick president and CEO Mark Bristow has repeated that the company’s “mutually beneficial relationship with successive Malian governments had endured for 30 years and occasional differences had always been amicably resolved.”

Mali partner

“Barrick remains committed to finding a mutually acceptable solution to the current impasse in the interest of all stakeholders,” the company said. “While Barrick does not accept any claims of wrongdoing, it has chosen to act in good faith as a long-standing partner of Mali.”

Last month, Reuters news agency reported that authorities arrested four local Barrick employees and charged them with financial crimes in an apparent attempt to squeeze funds out of the gold miner. Barrick declined to comment on the arrests and that incident appears to have been resolved.

Bristow has negotiated in numerous so-called difficult jurisdictions. His deal to develop the US$7 billion Reko Diq copper mine in Pakistan allocates half of its earnings to federal and local governments. It’s similar to how he resolved a dispute over the Porgera gold mine in Papua New Guinea and has advanced the company’s holdings in Tanzania.