Bloomberg Audio Studios, podcasts, radio news.
An Australian mining company has agreed to pay Molly one hundred and sixty million dollars after their CEO was detained along with two colleagues during a visit to the country.
Taking a look at a stock in Australia this morning. This is Resolute Mining. It's listed on the A six two hundred and we're actually seeing shared well. They're significantly plunging down, the most since nineteen eighty eight. But it's it's really not a great story here.
The payment half now, half later has been agreed.
As Molly's military leaders are looking to get a greater share of revenue from its mining industry and foreign operators are in its sites.
They adopted a new mining code that could see the government increase at stake to thirty five percent in existing gold mines, and that's caused all kinds of trouble for some of the biggest mine is that, including Barrack.
On this episode of The Next Africa podcast, we'll ask if Africa's third largest gold producer is still a safe place to invest and whether more executives could find themselves in detention as the government demands to renegotiate mining deals. I'm Jennifer's Abasaja and this is the Next Africa Podcast, bringing you one story each week from the continent driving the future of global growth with the context only Bloomberg
can provide. Joining us this week are Bloomberg's Katerina Hooyhe and Dekar, and our mining and metals reporter William Klows in Johannesburg.
Thank you both for being here.
This is a fascinating story that I've I've kind of personally been really interested in. But let's just take a few steps back and start with the arrest of the Resolute executives and what happened there to lead us to.
Hear Resolutes CEO Terry Hollihan and to our employees that the company has not named, traveled to Mali earliest months, possibly on an invite from Deamalin authorities to discuss what days are unsubstiate claims made against Resolute. They were meeting with tax authorities and Mali mining authorities, and following these meetings, on November eighth, Polo Hand and his colleagues were arrested
at their Bamaco hotel. Mali is saying that Resolute, which operates gold mine in Mali, one of the most productive mines, and it was set to ramper production this year and next. Oh, the Malie stay one hundred millions safe of France. That's about one hundred and sixty million, and they were detained at what's the financial crimes court in Bamacco for almost two weeks until Wednesday evening this week. Resulutes set agreed to pay eighty millions of those to settle this dispute
and for the release of its staff. They've also agreed to talk to transfer its mining assession too, a new mining code adopted last year in a sense to sort of resolve dispute.
Wow, So William, maybe you can tell us a bit more about this payment that was made that Calerina was just talking about. That's a significant amount of money. And where exactly is Mally claiming these funds are from or are for.
It's a difficult one to answer because the Malian government hasn't actually provided any evidence. We can know a bit about the allegations from talking to the companies and people in and around the government that the state's allegations relate to back taxes going back to the Middle of last decade to dividends that the state thinks they should have received from these joint ventures and the foreign company's use
of offshore bank accounts for doing business in Mali. However, whether the claims against the companies have any merit or not, the authorities in Mali have been using these allegations to renegotiate the partnerships with these companies, and so far, at least in the short term, they've been very successful.
Resolute declined to comment for this podcast, but in statements released since Hollahan was detained, the company has said while the state claims against the company are quote unsubstantiated, the agreement that we'll see Resolute pay one hundred and sixty million dollars also commits the government to drop those same claims. The Malian authorities did not respond to our request for comment, and it's coming out of at a time where we are seeing gold prices fluctuate climbing the last that I saw.
When we think about gold extraction in gold mining in the Sahal in Mali, how significant is it for the country, Katerina Well.
I mean, Mali is one of Africa's biggest gold producers and even one of the biggest in the world. Gold production last year was at ad and five tons. Gold is also by Fir's biggest source of export revenue. This estimated at more than two million people, about ten percent of the popul depend on the mining sector, and then we're talking both the industrial and matrisannel for the livelihood.
Gold has become even more important as an income source since Mali is so much of its aid suspended following too military coups one in twenty twenty and another one in twenty twenty one, and back then the country was also a temporary cut off from regional markets and at one point they faced for reaching economics and financial sanctions
by Naghbors when they failed to meet a deadline for elections. So, I mean, definitely something that the junta is trying to get more resources from and gain better control of.
And that's from the perspective of the junta. Sorry, but when we talk about the companies that are operating in the region, it's very important to them, right, I mean, William, you mentioned a few of the biggest mining companies. This must be an important region for them to operate and to profit from.
You've got large mining companies operating in the country. The four biggest minds that are operated by Barrack Gold, which is the second biggest gold company on the planet, other slightly smaller ones Allied Gold, B two Gold, and of course Resolute Mining. Some of these companies have their primary asset in Mali, and in the case of Barrack it's one of the biggest gold mines on the planet. At a time of high gold prices, there is no way in which they're going to risk losing these assets, which
I supposedly think about. It is the sort of ultimate threat the Malian authorities are leveling at the companies.
So stick with us when we come back. We're going to get into what this payout actually means and what effect it could have on other foreign companies that are working in the region but also across the continent. We'll be right back, Welcome back today on the podcast, we're looking into why Mali has been arresting foreign mining executive and whether we could see more payouts like that one
hundred and sixty million dollars from Australia's Resolute. So Katarina, what are some of the changes that we've seen from the junta in Mali?
What are they attempting to do.
One of the key measures is a new mining code that was adopted last year. There's also been the audit that William mentioned, which has led to more regulatory disputes, including claims of back taxes, which is with Resolute and Barrick are facing. Some companies have also been ordered to transfer operations back to Mali, which is the case with im Gold and Ashanti, who transferred the Yetela mine Earli this month. We've also seen other actors entering Mali's mining sector.
The country has moved away from its sort of traditional Western partners, including the EU and the US, and reinforced its ties with Russia, most prominently by the deployment of Wagner Group mercenaries back in twenty twenty one, and more recently, By has also pledged to build a gold refinery in Bamaco. This is unlikely to happen in time soon, but I mean the president's set with Barrick and Resolute sort of gives an idea of how Mali's going forward, and this
is sustance. It's likely to continue as long as the military is empower there.
Yeah, And that brings me to you, William as somebody who covers the sector quite after.
I mean, it's your beat.
What are these companies saying about the changing landscape that these governments are at least trying to instill.
So if we take the four biggest gold mining companies in Mali or the four biggest gold mines in Maley operated by these multinationals, Resolute has definitely experienced the most eye catching I raising treatment. I mean, inviting a company CEO to fly all the way to Marley and then arresting them is pretty drastic negotiating tactic. But the other three big companies, Barrack, Allied and B two Gold, they all have courted in North America, they've been experiencing comparable pressures.
Allied and B two Gold sort of got ahead of it and recently announced agreements with the Malian state. One of them will migrate their mining projects to the new mining code that Katerina mentioned, but the other one won't. But what they will both do is make large payments to the state one hundred and fifteen million dollars for Allied and two hundred and four million dollars for B
two Gold. And importantly, they've agreed to put their expansion projects that they're building fully on this new mining code that has these high at taxes, higher royalties, etc. And as for the really big one, which is Barrack's very large Lulugunkoto mine, those renegotiations have got pretty acrimonious, not as acrimonious as anyone as a resting the CEO, but nevertheless, the CEO has said he's very confident of reaching an
agreement with the authorities and that agreement, if finalized. When finalized, will surely see Maley increase its share of profits and revenue from that joint venture. So in short, everyone is negotiating, some in more comfortable conditions than others, and all of them are basically giving Mali's leaders more or less what they want.
It is this ultimately these governments and the Malian government with the upper hand or what is the negotiating power that these companies have if anything.
Well, it's hard to say at this point, but clearly these gold mining companies, some of which, as I said, have their key assets in Mali, are energetically negotiating with the state and concluding agreements that will transfer large sums of money now to the state and in the future to the state, and basically decrease their shares of future revenue and profits, and I think that shows how committed
they are to retain in control of these minds. You know, they've also accepted the new code, which is more onerous for them and more beneficial for the state for the expansion projects that they already have under way.
But where I.
Think we might see Western investors think twice and take a step back, especially after Terry Hollahan's experience, are those who have projects in Mali that are at an earlier stage, or who those who were considering entering Malee with the gold sector, the mining sector more broadly. This will definitely understate it slightly give them calls for pause.
Thank you both so much for joining us. That's William Klouse and Katerina Hooihe are two Bloomberg reporters. And as we said earlier, Resolute decline to comment for this podcast, but in statements released since Hollyhand was detained, the company has said that while the States claims against the company are quote unsubstantiated, the agreement that will see Resolute pay one hundred and sixty million dollars also commits the government to drop those same claims. You can read full coverage
of this story across Bloomberg platforms. Now here's a few other stories we're watching in the region.
This week.
South Africa's inflation rate fell to a four year low ahead of another reduction in interest rates. Consumer prices rose two point eight percent in October, down from three point eight percent the previous month and lower than the three percent many economists had actually been expecting. And an opposition leader one elections in Somaliland, casting doubt over whether the semi autonomous region will honor a deal that will enable Ethiopia to build a military base on its coast on
the Gulf of Aden. Abdu Rahman Mohammad Abdullahi, a former Speaker of Parliament, one about sixty four percent of the ballots cast in the November thirteenth vote, according to official tallies. His campaign pledges included reviving the region's faltering economy, restoring national unity, and maintaining political stability. And you can follow these stories and more across Bloomberg, including the Next African newsletter. We'll put a link to that in the show notes.
This program was produced by Adrian Bradley. Don't forget to follow and review this show. We'd love to hear from you wherever you usually get your podcasts. I'm Jennifer's Abasaja. Thanks as always for listening.