Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: An Australian mining company has agreed to pay Molly one
Speaker 2: hundred and sixty million dollars after their CEO was detained
Speaker 2: along with two colleagues during a visit to the country.
Speaker 3: Taking a look at a stock in Australia this morning.
Speaker 3: This is Resolute Mining. It's listed on the A six
Speaker 3: two hundred and we're actually seeing shared well. They're significantly
Speaker 3: plunging down, the most since nineteen eighty eight. But it's
Speaker 3: it's really not a great story here.
Speaker 4: The payment half now, half later has been agreed.
Speaker 2: As Molly's military leaders are looking to get a greater
Speaker 2: share of revenue from its mining industry and foreign operators
Speaker 2: are in its sites.
Speaker 1: They adopted a new mining code that could see the
Speaker 1: government increase at stake to thirty five percent in existing
Speaker 1: gold mines, and that's caused all kinds of trouble for
Speaker 1: some of the biggest mine is that, including Barrack.
Speaker 2: On this episode of The Next Africa podcast, we'll ask
Speaker 2: if Africa's third largest gold producer is still a safe
Speaker 2: place to invest and whether more executives could find themselves
Speaker 2: in detention as the government demands to renegotiate mining deals.
Speaker 2: I'm Jennifer's Abasaja and this is the Next Africa Podcast,
Speaker 2: bringing you one story each week from the continent driving
Speaker 2: the future of global growth with the context only Bloomberg
Speaker 2: can provide. Joining us this week are Bloomberg's Katerina Hooyhe
Speaker 2: and Dekar, and our mining and metals reporter William Klows
Speaker 2: in Johannesburg.
Speaker 4: Thank you both for being here.
Speaker 2: This is a fascinating story that I've I've kind of
Speaker 2: personally been really interested in. But let's just take a
Speaker 2: few steps back and start with the arrest of the
Speaker 2: Resolute executives and what happened there to lead us to.
Speaker 5: Hear Resolutes CEO Terry Hollihan and to our employees that
Speaker 5: the company has not named, traveled to Mali earliest months,
Speaker 5: possibly on an invite from Deamalin authorities to discuss what
Speaker 5: days are unsubstiate claims made against Resolute. They were meeting
Speaker 5: with tax authorities and Mali mining authorities, and following these meetings,
Speaker 5: on November eighth, Polo Hand and his colleagues were arrested
Speaker 5: at their Bamaco hotel. Mali is saying that Resolute, which
Speaker 5: operates gold mine in Mali, one of the most productive mines,
Speaker 5: and it was set to ramper production this year and next. Oh,
Speaker 5: the Malie stay one hundred millions safe of France. That's
Speaker 5: about one hundred and sixty million, and they were detained
Speaker 5: at what's the financial crimes court in Bamacco for almost
Speaker 5: two weeks until Wednesday evening this week. Resulutes set agreed
Speaker 5: to pay eighty millions of those to settle this dispute
Speaker 5: and for the release of its staff. They've also agreed
Speaker 5: to talk to transfer its mining assession too, a new
Speaker 5: mining code adopted last year in a sense to sort
Speaker 5: of resolve dispute.
Speaker 2: Wow, So William, maybe you can tell us a bit
Speaker 2: more about this payment that was made that Calerina was
Speaker 2: just talking about. That's a significant amount of money. And
Speaker 2: where exactly is Mally claiming these funds are from or
Speaker 2: are for.
Speaker 6: It's a difficult one to answer because the Malian government
Speaker 6: hasn't actually provided any evidence. We can know a bit
Speaker 6: about the allegations from talking to the companies and people
Speaker 6: in and around the government that the state's allegations relate
Speaker 6: to back taxes going back to the Middle of last
Speaker 6: decade to dividends that the state thinks they should have
Speaker 6: received from these joint ventures and the foreign company's use
Speaker 6: of offshore bank accounts for doing business in Mali. However,
Speaker 6: whether the claims against the companies have any merit or not,
Speaker 6: the authorities in Mali have been using these allegations to
Speaker 6: renegotiate the partnerships with these companies, and so far, at
Speaker 6: least in the short term, they've been very successful.
Speaker 2: Resolute declined to comment for this podcast, but in statements
Speaker 2: released since Hollahan was detained, the company has said while
Speaker 2: the state claims against the company are quote unsubstantiated, the
Speaker 2: agreement that we'll see Resolute pay one hundred and sixty
Speaker 2: million dollars also commits the government to drop those same claims.
Speaker 2: The Malian authorities did not respond to our request for comment,
Speaker 2: and it's coming out of at a time where we
Speaker 2: are seeing gold prices fluctuate climbing the last that I saw.
Speaker 2: When we think about gold extraction in gold mining in
Speaker 2: the Sahal in Mali, how significant is it for the country,
Speaker 2: Katerina Well.
Speaker 5: I mean, Mali is one of Africa's biggest gold producers
Speaker 5: and even one of the biggest in the world. Gold
Speaker 5: production last year was at ad and five tons. Gold
Speaker 5: is also by Fir's biggest source of export revenue. This
Speaker 5: estimated at more than two million people, about ten percent
Speaker 5: of the popul depend on the mining sector, and then
Speaker 5: we're talking both the industrial and matrisannel for the livelihood.
Speaker 5: Gold has become even more important as an income source
Speaker 5: since Mali is so much of its aid suspended following
Speaker 5: too military coups one in twenty twenty and another one
Speaker 5: in twenty twenty one, and back then the country was
Speaker 5: also a temporary cut off from regional markets and at
Speaker 5: one point they faced for reaching economics and financial sanctions
Speaker 5: by Naghbors when they failed to meet a deadline for elections. So,
Speaker 5: I mean, definitely something that the junta is trying to
Speaker 5: get more resources from and gain better control of.
Speaker 2: And that's from the perspective of the junta. Sorry, but
Speaker 2: when we talk about the companies that are operating in
Speaker 2: the region, it's very important to them, right, I mean, William,
Speaker 2: you mentioned a few of the biggest mining companies. This
Speaker 2: must be an important region for them to operate and
Speaker 2: to profit from.
Speaker 6: You've got large mining companies operating in the country. The
Speaker 6: four biggest minds that are operated by Barrack Gold, which
Speaker 6: is the second biggest gold company on the planet, other
Speaker 6: slightly smaller ones Allied Gold, B two Gold, and of
Speaker 6: course Resolute Mining. Some of these companies have their primary
Speaker 6: asset in Mali, and in the case of Barrack it's
Speaker 6: one of the biggest gold mines on the planet. At
Speaker 6: a time of high gold prices, there is no way
Speaker 6: in which they're going to risk losing these assets, which
Speaker 6: I supposedly think about. It is the sort of ultimate
Speaker 6: threat the Malian authorities are leveling at the companies.
Speaker 2: So stick with us when we come back. We're going
Speaker 2: to get into what this payout actually means and what
Speaker 2: effect it could have on other foreign companies that are
Speaker 2: working in the region but also across the continent. We'll
Speaker 2: be right back, Welcome back today on the podcast, we're
Speaker 2: looking into why Mali has been arresting foreign mining executive
Speaker 2: and whether we could see more payouts like that one
Speaker 2: hundred and sixty million dollars from Australia's Resolute. So Katarina,
Speaker 2: what are some of the changes that we've seen from
Speaker 2: the junta in Mali?
Speaker 4: What are they attempting to do.
Speaker 5: One of the key measures is a new mining code
Speaker 5: that was adopted last year. There's also been the audit
Speaker 5: that William mentioned, which has led to more regulatory disputes,
Speaker 5: including claims of back taxes, which is with Resolute and
Speaker 5: Barrick are facing. Some companies have also been ordered to
Speaker 5: transfer operations back to Mali, which is the case with
Speaker 5: im Gold and Ashanti, who transferred the Yetela mine Earli
Speaker 5: this month. We've also seen other actors entering Mali's mining sector.
Speaker 5: The country has moved away from its sort of traditional
Speaker 5: Western partners, including the EU and the US, and reinforced
Speaker 5: its ties with Russia, most prominently by the deployment of
Speaker 5: Wagner Group mercenaries back in twenty twenty one, and more recently,
Speaker 5: By has also pledged to build a gold refinery in Bamaco.
Speaker 5: This is unlikely to happen in time soon, but I
Speaker 5: mean the president's set with Barrick and Resolute sort of
Speaker 5: gives an idea of how Mali's going forward, and this
Speaker 5: is sustance. It's likely to continue as long as the
Speaker 5: military is empower there.
Speaker 2: Yeah, And that brings me to you, William as somebody
Speaker 2: who covers the sector quite after.
Speaker 4: I mean, it's your beat.
Speaker 2: What are these companies saying about the changing landscape that
Speaker 2: these governments are at least trying to instill.
Speaker 6: So if we take the four biggest gold mining companies
Speaker 6: in Mali or the four biggest gold mines in Maley
Speaker 6: operated by these multinationals, Resolute has definitely experienced the most
Speaker 6: eye catching I raising treatment. I mean, inviting a company
Speaker 6: CEO to fly all the way to Marley and then
Speaker 6: arresting them is pretty drastic negotiating tactic. But the other
Speaker 6: three big companies, Barrack, Allied and B two Gold, they
Speaker 6: all have courted in North America, they've been experiencing comparable pressures.
Speaker 6: Allied and B two Gold sort of got ahead of
Speaker 6: it and recently announced agreements with the Malian state. One
Speaker 6: of them will migrate their mining projects to the new
Speaker 6: mining code that Katerina mentioned, but the other one won't.
Speaker 6: But what they will both do is make large payments
Speaker 6: to the state one hundred and fifteen million dollars for
Speaker 6: Allied and two hundred and four million dollars for B
Speaker 6: two Gold. And importantly, they've agreed to put their expansion
Speaker 6: projects that they're building fully on this new mining code
Speaker 6: that has these high at taxes, higher royalties, etc. And
Speaker 6: as for the really big one, which is Barrack's very
Speaker 6: large Lulugunkoto mine, those renegotiations have got pretty acrimonious, not
Speaker 6: as acrimonious as anyone as a resting the CEO, but nevertheless,
Speaker 6: the CEO has said he's very confident of reaching an
Speaker 6: agreement with the authorities and that agreement, if finalized. When finalized,
Speaker 6: will surely see Maley increase its share of profits and
Speaker 6: revenue from that joint venture. So in short, everyone is negotiating,
Speaker 6: some in more comfortable conditions than others, and all of
Speaker 6: them are basically giving Mali's leaders more or less what
Speaker 6: they want.
Speaker 2: It is this ultimately these governments and the Malian government
Speaker 2: with the upper hand or what is the negotiating power
Speaker 2: that these companies have if anything.
Speaker 6: Well, it's hard to say at this point, but clearly
Speaker 6: these gold mining companies, some of which, as I said,
Speaker 6: have their key assets in Mali, are energetically negotiating with
Speaker 6: the state and concluding agreements that will transfer large sums
Speaker 6: of money now to the state and in the future
Speaker 6: to the state, and basically decrease their shares of future
Speaker 6: revenue and profits, and I think that shows how committed
Speaker 6: they are to retain in control of these minds. You know,
Speaker 6: they've also accepted the new code, which is more onerous
Speaker 6: for them and more beneficial for the state for the
Speaker 6: expansion projects that they already have under way.
Speaker 1: But where I.
Speaker 6: Think we might see Western investors think twice and take
Speaker 6: a step back, especially after Terry Hollahan's experience, are those
Speaker 6: who have projects in Mali that are at an earlier stage,
Speaker 6: or who those who were considering entering Malee with the
Speaker 6: gold sector, the mining sector more broadly. This will definitely
Speaker 6: understate it slightly give them calls for pause.
Speaker 2: Thank you both so much for joining us. That's William
Speaker 2: Klouse and Katerina Hooihe are two Bloomberg reporters. And as
Speaker 2: we said earlier, Resolute decline to comment for this podcast,
Speaker 2: but in statements released since Hollyhand was detained, the company
Speaker 2: has said that while the States claims against the company
Speaker 2: are quote unsubstantiated, the agreement that will see Resolute pay
Speaker 2: one hundred and sixty million dollars also commits the government
Speaker 2: to drop those same claims. You can read full coverage
Speaker 2: of this story across Bloomberg platforms. Now here's a few
Speaker 2: other stories we're watching in the region.
Speaker 4: This week.
Speaker 2: South Africa's inflation rate fell to a four year low
Speaker 2: ahead of another reduction in interest rates. Consumer prices rose
Speaker 2: two point eight percent in October, down from three point
Speaker 2: eight percent the previous month and lower than the three
Speaker 2: percent many economists had actually been expecting. And an opposition
Speaker 2: leader one elections in Somaliland, casting doubt over whether the
Speaker 2: semi autonomous region will honor a deal that will enable
Speaker 2: Ethiopia to build a military base on its coast on
Speaker 2: the Gulf of Aden. Abdu Rahman Mohammad Abdullahi, a former
Speaker 2: Speaker of Parliament, one about sixty four percent of the
Speaker 2: ballots cast in the November thirteenth vote, according to official tallies.
Speaker 2: His campaign pledges included reviving the region's faltering economy, restoring
Speaker 2: national unity, and maintaining political stability. And you can follow
Speaker 2: these stories and more across Bloomberg, including the Next African newsletter.
Speaker 2: We'll put a link to that in the show notes.
Speaker 2: This program was produced by Adrian Bradley. Don't forget to
Speaker 2: follow and review this show. We'd love to hear from
Speaker 2: you wherever you usually get your podcasts. I'm Jennifer's Abasaja.
Speaker 2: Thanks as always for listening.