In the Sahel, Western mining groups under pressure from military junta

Who will be next? The twelve days that the general director of the Australian company Resolute Mining spent detained in Bamako sound like a warning for foreign mining groups operating in Mali and throughout the Sahel. The British Terence Holohan and two other employees of the Resolute company, which exploits the Syama gold mine in southern Mali, were released on Wednesday, November 20 after the conclusion of an agreement that provides for the payment of 160 million dollars to the government Malian to solve a financial problem. dispute.

At the end of September, several senior Malian managers of the important Canadian company Barrick Gold, also in conflict with the country’s authorities, also spent several days in prison. “The environment is changing very quickly. “Companies must be very careful when analyzing risks and preparing for all eventualities”indicates Christian Mion, expert in the mining sector within the firm EY.

These episodes illustrate the maximum pressure exerted by the ruling junta in Bamako to make better use of the revenues of the mining industry. In 2023, President Assimi Goïta introduced a reform of the mining code that allows the State to acquire up to 30% of the shares in new projects and reduce tax advantages for foreign companies.

The government is demanding that existing contracts be renegotiated, regardless of agreements reached with previous administrations. A demand expressed in a context of continuous rise in gold prices, of which Mali is the third largest African producer and which constitutes 75% of its export earnings.

“Financing military campaigns”

“As we generate a lot more liquidity because of 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 said in October during a quarterly results conference call. “We see it all over Africa, particularly in West Africa”noticed.

The context is especially tense in the Sahel countries weakened by terrorist violence and whose military regimes lack 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 boards in power, it is also a question of“encourage resource nationalism to curry favor with their respective populations”the expert emphasizes.

Thus, in Burkina Faso, Captain Ibrahim Traoré, strongman 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 underwent a surprise revision, aimed at increasing state involvement in extractive projects.

But for multinationals, the signs really turned red at the beginning of October, when the Burkinabe leader threatened to withdraw their operating permits. The announcement caused a wave of panic in the stock market. Canadian companies Iamgold, Fortuna Silver Mines and Orezone Gold saw their valuations fall, as did Australia’s West African Resources.

Türkiye and Russia “guests”

These expeditious methods risk temporarily dampening the enthusiasm of potential Western investors. “Today there is almost no exploration in Burkina or MaliA person familiar with the active sector in the region reports on condition of anonymity. It is difficult to commit tens of millions of euros with the risk that the rules of the game will change along the way. »

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 extraction sites in recent years. For the moment, the threats of withdrawal made by Captain Traoré have not been fulfilled.

In Niger, however, the general in power, Abdourahamane Tiani, has already taken measures. Following the divorce between Niamey and Paris, the French uranium specialist Orano saw the exploitation permit for one of the largest uranium deposits in the world, Imouraren, revoked in June. However, the French group, which announced at the end of October that it would suspend production at its Nigerien subsidiary, is not the only one affected. The Nigerien junta also withdrew the Canadian group GoviEx’s exploitation permit for a large uranium deposit near Arlit.

Other countries could try to take advantage of the advantage, such as Türkiye, 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 seems favorable to a gradual restructuring of the investment landscape. Western companies should not withdraw overnight. “The time spent selling these resources is long and demand is low given the high operational risks”Tiffany Wognaih emphasizes.

but he is “most likely” that in the future interest in the sector will come from “ non-western actors like Russia »underlines. An economic and geopolitical realignment in countries whose military regimes, supported by Moscow, proclaim their desire to diversify their partners.

The Sahelian boards are not the only ones that 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 that, according to him, could lead to a renegotiation of certain contracts so that they benefit more local populations.

Also in Ivory Coast the government has announced that it wants to reform its mining code. The challenge is to increase the income and local value of the sector while its numerous resources (gold, manganese, lithium, etc.) increasingly attract investor interest.