Mali’s decision to introduce a new mining law allowing the government to increase its ownership stake in mining projects has raised concerns within the industry, potentially impacting investment and stability in the country’s mining sector.
Resource Nationalism Trend:
Mali’s Parliament recently adopted a new mining code, part of a growing global trend of resource nationalism that seeks to increase state control over valuable mineral resources. The new code enables the state and local investors to hold stakes as high as 35% in mining projects, up from the current limit of 20%.
Uncertainty Over Timing and Implementation:
While the law awaits the signature of President Assimi Goita to become effective, the timeline for its implementation remains uncertain. The Ministry of Mines’ technical adviser, Lassana Guindo, indicated that details and implementing decrees are still in progress.
Existing Operations Seek Protection:
Mining companies operating in Mali, including Barrick and B2Gold, have emphasized that existing mining operations should be safeguarded by previous agreements. These conventions could provide a basis for seeking international arbitration if the new law’s implications affect ongoing projects.
Impacts on Gold Mining Industry:
Gold mining plays a crucial role in Mali, contributing 9% to the country’s gross domestic product (GDP) and accounting for half of state revenues. The law’s introduction has sparked concerns about potential impacts on the stability and attractiveness of Mali’s mining sector.
Mixed Responses from Mining Companies:
Mining companies have offered mixed responses. Barrick, one of the world’s largest gold miners, has engaged in discussions with Mali’s leadership and expressed optimism about finding mutually acceptable solutions. B2Gold has indicated that existing projects compliant with prior conventions should not be materially impacted.
Potential Negative Investment Effects:
However, analysts and industry experts predict potential negative effects on investment. The fear is that the new law, even if initially applied to new projects, could discourage existing operators from pursuing new ventures and deter foreign miners from investing in Mali. Analysts also suggest the law could signal a broader shift in policies that might impact existing contracts and obligations in the future.
Tensions Between Attractiveness and National Interest:
Mali’s challenge lies in balancing its desire to retain attractiveness for foreign investors while asserting greater national control over its mineral resources. Striking this balance will be pivotal for the country’s economic stability, investment climate, and its relationship with mining companies operating within its borders.
