World's Second Largest Gold Producer Faces Worsening Predicament, Core Assets at Risk

Barrick Mining, a well-known gold producer, is currently facing an increasingly thorny issue: its dispute with the Malian government in West Africa has escalated sharply this week, casting greater uncertainty over the future of its second-largest gold mine.

To provide context, the dispute dates back to 2023, when Mali revised its mining regulations, increasing royalty rates and the government's equity stake in joint ventures. Subsequently, the Malian government demanded that foreign investors pay back-taxes, with overseas-listed miners such as B2Gold and Allied Gold Corporation having already reached settlement agreements with the authorities.

The dispute between Barrick Mining and the Malian government has continued to escalate over the past eight months. Starting in November last year, the Malian government banned Barrick Mining from exporting gold from its Loulo-Gounkoto mine and seized 3 mt of gold inventory, along with four Barrick executives. The company subsequently suspended production at the mine in January this year.

This week, the Malian Commercial Court ruled to place the mine under temporary administration for a period of six months, with Barrick required to transfer management to a government-appointed accountant, who is also the former Minister of Health, Zoumana Makagi.The operating license for the company's ore processing plant in the Loulo region is set to expire in February next year, shortly after the end of the temporary administration period.

A company spokesperson stated that a renewal application was submitted four months ago, and that the company has another license in the Gounkoto region with a validity period of 17 years.

According to Barrick's fiscal 2024 annual report, the Loulo-Gounkoto mine, which ranks among the top 10 gold mines globally, had a capacity of 723,000 ounces last year, with 578,000 ounces attributed to Barrick based on its equity stake (80%).

As the world's second-largest gold producer, Barrick Mining had a total gold capacity of 3.91 million ounces in 2024, with only its flagship Carlin mine in Nevada surpassing the Loulo-Gounkoto mine in terms of production and revenue.

(Source: Barrick Mining Annual Report)

In response to the sharp escalation of the dispute, the company stated that it remains committed to negotiating a "mutually acceptable solution" with the Malian government, while emphasizing that the intervention at the mine is illegal and that it has appealed the court order issued this week.

Meanwhile, Barrick has also removed the capacity of its Malian gold mine from its gold production expectations for fiscal 2025, with the latest guidance being 3.15-3.5 million ounces, suggesting that it may fall to become the world's third-largest gold producer this year.

Meanwhile, Barrick Mining is pinning its hopes on international arbitration to intervene in the dispute. The company stated that it has fully initiated arbitration proceedings at the International Centre for Settlement of Investment Disputes, requesting a ruling that the concession agreement held by its subsidiary in Mali is not affected by "changes in Malian law or regulations." In response, Mali stated that the agreement to maintain policy stability for the Loulo mining area had expired in April 2023, and therefore the new mining law applies to the area.

During an earnings call in May this year, Barrick Mining also indicated that the company has faced similar situations many times before, such as the suspension of operations in Tanzania and the failure to renew licenses in Papua New Guinea. Through persistent efforts, the company not only overcame these difficulties but also established new partnerships as a result.

Barrick Mining also disclosed that its suspended gold mine in Mali still incurs monthly operating costs of approximately $15 million, including maintaining infrastructure operations and retaining all employees. If the mine enters what is known as a full maintenance and care state, where only the most basic maintenance operations are retained, costs are expected to be halved.