Perspective: How Mali’s tough conversations with Barrick are being fueled by two former workers

Mali’s demands for a payment of almost $200 million from the Canadian miner are being pushed by two former corporate officials who have firsthand knowledge of Barrick Gold’s activities in West Africa, according to persons involved with the negotiations.

Two important members of the government’s negotiation team, Mamou Toure and Samba Toure, were for Randgold, a mining firm that is now a part of Barrick, in Mali. It opens a new tab (ABX.TO).

After seizing three metric tons of gold from Barrick in December, valued at around $245 million, Mali’s military-led government has given the miner until Saturday at midnight to comply with its demands.

It demands that Barrick pay back taxes of 125 billion CFA francs ($199 million), according to a person with knowledge of the matter.

Mali will free four Barrick executives who have been held since late November and return the confiscated gold if an agreement is reached, the source added.

Without outlining the specifics of the accusations made against its staff, Barrick has officially denied them. A court document seen by Reuters claims that they cover terrorism funding and money laundering.

When asked about the progress of the negotiations, Barrick remained silent, and a request for comment from Mali’s mines minister was not answered.

As the military administrations of Mali, Niger, and Burkina Faso vie for a larger portion of mining profits, the conflict has consequences for international miners and other foreign businesses who invested billions of dollars in West Africa and are now compelled to operate under new regulations.

According to Beverly Ochieng, senior analyst for Francophone Africa at Control Risks, “the standoff with Barrick is a snapshot of just how far military-led governments in the Sahel are willing to go to compel foreign operators to comply with new regulations that align with their pursuit of resource nationalism.”

For a picture of the negotiations, Reuters interviewed around 20 people, including diplomats, consultants, mining executives, and those with firsthand knowledge of the discussions. The sensitivity of the matter prompted the sources to request anonymity.

According to nine persons acquainted with the situation, the two Toures are part of a tiny circle of important figures on the Malian side, such as Minister of Finance and Economy Alousseini Sanou and junta head Assimi Goita.

Although they have the same last name, the guys are unrelated. As the head of operations for West Africa at Randgold, Samba Toure was the more senior of the two and decades older. Mamou oversaw the subterranean operations of the Loulo mine.

According to the sources, Mamou’s tight connection with Sanou, Mali’s prominent finance minister, has made him the country’s most formidable negotiator.

After Mamou’s consultancy, Iventus, was awarded the contract to audit international mining firms in Mali, the miners’ contracts were renegotiated and a new mining code was created in 2023. Samba currently works at the consultancy for him.

An individual who used to work with both of them stated, “It’s Mamou who is currently the boss,” but added that Samba’s technical expertise and experience were invaluable in making decisions. “The decisions come much more from Samba than from Mamou.”

Asked in-depth inquiries by Reuters, Mamou claimed that the Mali people had not benefited from gold extraction for decades. Mali is the second-largest producer of gold in Africa.

“The state’s request for a rectification is only natural,” he told Reuters. “The state has made a great effort to reach an agreement, which is why all the other companies have reached an agreement with the state.”

An inquiry was not answered by Samba Toure.

ACRIMONIOUS TALKS

While other Western miners have recently made agreements with Mali, such as Allied Gold, Australia’s Resolute (RSG.AX), Canada’s B2Gold (BTO.TO), and others, Barrick’s talks have been fractious.

To gain more control over their gold and uranium resources, the military regimes in Mali, Niger, and Burkina Faso are use court battles, arrests, and nationalizations in addition to threats to strengthen their relations with Russia.

Control Risks’ Ochieng, however, asserted that this did not imply that Western operators were undesirable. “Several Western mining companies have been allowed to expand operations and take on new assets provided they comply with the latest regulations and taxation demands,” she added.

When Mali’s junta took control in 2020, they promised to examine the country’s mining industry so the state could profit more from the record-high price of gold.

A quick deal was achieved by several businesses, such as B2Gold. It took longer for others, such as Resolute of Australia, whose CEO was arrested while in Mali for discussions.

B2Gold told Reuters that after closing the acquisition, it was moving forward with planned investments at its Fekola gold complex this year. As it develops the Syama mine, Resolute expressed confidence that its agreement will open the door for improved cooperation with Mali’s government during an investor call on Thursday.

However, things with Barrick soured last year. Following their detention by police in September, four Malians employed by Barrick were freed when the business paid 50 billion CFA francs ($80 million). But Mali wanted further payments, claiming it is owed almost $350 million in total.

Barrick’s operations in Mali produced $949 million in revenue in the first nine months of last year, accounting for 14% of the company’s gold output.

Bristow told Reuters in early November that the business has provided Mali with 55% of the profits from its Loulo-Gounkoto mining complex, which is comparable to a deal the miner made with Tanzania around five years prior.

Mali asked that the entire amount be paid all at once rather than in installments after Barrick failed to pay a second tranche, accusing the corporation of breaching its contract. The shipments of Barrick were blocked in early November.

After deducting VAT credits, Mali claims Barrick still owes 125 billion CFA francs.

In late November, four workers were arrested once more after no payment was received, and on December 5, Mali issued an arrest order for Barrick CEO Mark Bristow.

Contacts, however, persisted behind the scenes. On December 6, one person who talked with top management at Barrick informed Reuters that Barrick was almost ready to pay a second tranche of 50 billion CFA. But the talks stagnated and no money was paid. Formal negotiations were restarted Tuesday.

Bristow led Barrick to likely have the largest operational risk tolerance of any big miner, according to Freddie Brooks, metals and mining analyst at BMI, a FitchSolutions business.

“If they can’t negotiate a compromise with Mali’s military junta, it won’t be for lack of trying,” he explained.

BRISTOW CLASHES

According to someone who has worked with both Toures, Samba Toure left Randgold around nine years ago following a furious online meeting with Bristow, who was then the company’s CEO.

The division widened when Samba submitted his resignation and was denied the opportunity to sell his London-based vested Randgold share options.

The sources said that Mamou Toure had previously departed Randgold in 2015 after a disagreement with Bristow on the employment of foreign contractors.

An inquiry on the Toures’ leaving circumstances was not answered by Barrick.

The consulting contract with his company, Iventus Mining, was awarded to Mamou after the government declared its intention to audit the mines. According to two sources, Samba Toure oversaw the audits.

In 2022, Samba was chosen chairman of the board of SOREM, a state-owned mining firm established by Mali, while Mamou was made a director.

But there are those who question the Toures’ effect. According to one source, junta chairman Goita became impatient with the discussions last summer and recruited Modibo Kone, the director of state security and one of the five colonels who have now become generals, to lead the junta. Kone was verified to be involved in the discussions by a second source.

One person with knowledge of the negotiations claims that the finance minister has also taken charge of the discussions at least once and told Mamou to resign when he overreached himself with his demands.

According to five sources, the mines minister—a technocrat with no military connections—has been marginalized. By pointing out that the ministry has two representatives on the negotiating panel, Mamou refuted that.

“Both the finance ministry and the mines ministry give the commission its orders,” he added.

Requests for comments were not answered by Mali’s presidency or finance ministry. No one from the state security service could be reached.

A SPECIAL FORCES RAID

Stockpiles were growing in the safe “gold room” at the Loulo-Gounkoto mine complex after exports were prohibited and Barrick’s mines produced up to half a ton of gold per week.

According to a court ruling seen by Reuters on January 2, which authorized its seizure, Barrick had little over 3 tons in its vaults as of December 27.

A helicopter made an unexpected arrival at the mining complex’s landing strip in the middle of the morning on January 11. One of the informants said that after disembarking, four special forces troops, a customs officer, two state mining directorate personnel, and several plainclothes officials gave documents to Barrick employees allowing them to confiscate the gold.

The insider stated, “They shipped a first quantity and came back in the evening for a second shipment,” and that by 7:00 p.m., all was finished.

The gold that was taken from Barrick’s mines is currently kept in the vaults of the Banque Malienne de Solidarite, which is controlled by the state and located in Bamako. The bank said it would not comment.

The gold’s confiscation was verified by Barrick, which also reports that activities at Loulo-Gounkoto have been halted.

According to the Jan. 2 ruling, Bristow and other Barrick personnel are facing money laundering and other unidentified financial criminal allegations under Mali’s laws, and the seizure was a precautionary measure.

Due in significant part to higher taxes under the new 2023 mining rule, Barrick is opposing the government’s request to switch, according to two sources.

The mining permit renewal for Barrick is scheduled for next year. The administration has hinted that it may reject it.

A source who has provided advice to the Malian government stated that the corporation aimed to get a long-term renewal on favorable terms, while the government sought leverage in that discussion.

“I think they don’t trust each other, but no one has an interest in a break-up,” the individual stated.

Some investors, however, believe Barrick will face a difficult journey in Mali, including the potential loss of its properties.

According to Martin Pradier, materials analyst at Toronto-based Veritas Investment Research Corporation, which covers Barrick, “the market has already factored in all the risks on Barrick shares, and the possibility that not much of production is going to come from Mali anytime soon.”