Wednesday, January 19

Africa’s crackdown on informal gold miners extends to Mali

Mali is getting closer to introducing new rules to better control artisanal gold mining and surpass South Africa as the second largest producer on the continent.

The country has struggled to control informal production that is sold on the black market or smuggled out, and gold is also illegally funneled across the nation from its neighbors. While a mining code that came into effect in late 2020 set out plans to reform the sector, no measures were implemented.

That is changing now. The government plans to require permits for small miners and establish 200 cooperatives with the help of the World Bank as part of a move to formalize trade by middlemen. In addition, Barrick Gold Corp. will assist in assigning land for those workers to formalize sales, Mining Minister Lamine Traore said in an interview. Those changes, which are in the works in 2022, could see Mali’s total production rise 15%, he said.

It is the latest move by an African nation to maximize profits from its gold resources, as the metal is trading within 15% of an all-time high. In recent years, Ethiopia has funneled sales through the central bank to curb smuggling, while Nigeria announced plans to move informal production into a supervised supply chain. In addition, Tanzania introduced shopping malls to reduce illegal exports.

“We can go from being the third largest gold producer to being the second largest in Africa,” Traore said by phone from Bamako.

The authorities estimate that Mali loses up to 15 tons a year, equivalent to about $ 860 million at current prices, from artisanal gold production that is smuggled out of the country. Its favorable export taxes also encourage supplies to enter the country illegally before they are shipped.

“Mali could significantly increase production if it had better control over the production and exports of the artisanal mining sector,” said Abdoulaye Pona, director of the Chamber of Mining, in a separate interview.

Artisanal gold mines in the Sahel region of West Africa, including Mali, have become a source of income and recruits for Islamist militants, as they secure sites or collect illicit taxes, the International Crisis Group said. Mali’s industrial mining areas have largely been spared the violence, although there have been sporadic attacks, most recently near the border with Mauritania, which targeted a convoy carrying equipment to a mine in the southwest.

“Mining, mainly gold, is a mainstay of the country’s economy and accounts for almost 10% of gross domestic product,” Traore said. “Clearly, the security issue is something we cannot ignore.”

In addition to Barrick, companies with operations or assets there include B2Gold Corp. and Endeavor Mining Corp. Mali also has untapped resources or deposits of commodities such as lithium, a key metal used in electric batteries and iron ore.

More on Mali’s Commodity Plans:

  • Industrial production from gold mining is estimated at 70 tonnes in 2021 and could rise to 80 tonnes in the coming years as Mali formalizes artisanal mining and other operations get underway, Traore said.
  • The minister said the government hopes to resolve an arbitration case with B2Gold over a mining permit this year.
  • Work is underway to start lithium production at the Goulamina project.
  • Mali is in the process of amending its oil code to make the sector more attractive to investors. Following recent visits to Russia and Dubai, the government hopes to resume exploration projects soon.

© 2021 Bloomberg

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