‘Resource nationalism’ raises mining risk

On June 16, a judge in Bamako, Mali, took into state control the mining assets belonging to Barrick Mining’s Loulo-Gounkoto. The gold mine has been at the centre of a tax and ownership dispute with the state, which has been under the control of a military junta since a coup in May 2021.

Barrick’s case is the latest escalation in tensions between the military junta-led government and the Canadian miner, symptomatic of a fresh and acute bout of “resource nationalism” spreading across West Africa. 

As Covid debt problems accumulate and populism changes geopolitical relationships, governments in Burkina Faso, Mali, Niger, Guinea and Ghana are revoking permits, expropriating projects and renegotiating contracts to secure a larger share of revenues.  

In mid-April, the Ghanaian government under newly elected President John Mahama took the unusual step of initially refusing to renew South African miner Gold Fields’ lease of the Damang mine, claiming that the company had failed to declare its reserves, present any plans or allocate any budget to exploration. The government’s rationale is that automatic renewal of licences is a “neo-colonial” practice. The outcome is that the lease has been renewed for a 12-month period while the asset is transferred into state ownership. 

In Guinea, the government invoked “use it or lose it” and compliance clauses in May to revoke four gold exploration permits from the UK’s Endeavour Mining and 125 other exploration permits.

In the Democratic Republic of Congo (DRC), just as Australian miner AVZ Minerals was about to break ground on the 700,000-tonne-a-year Manono lithium mine, authorities cancelled its rights and split the permit, handing part of it to China’s mining giant, Zijin Mining Group. It was a new example of the DRC’s nefarious practice of flipping – expropriating proven assets and re-allocating them. Past deals were rooted in corrupt payments, leading to years of arbitration, investigation, litigation and delayed projects.

While Barrick and others have sought to reclaim their assets through international arbitration, a long and arduous process, AVZ has tried a new approach. It reached a deal on May 7 with KoBold Metals, a company backed by US billionaires Jeff Bezos, Bill Gates and Michael Bloomberg, which looks as though it will bring the full weight of the Trump administration to bear.

The KoBold-AVZ deal comes after DRC’s President Félix Tshisekedi begged US President Donald Trump for help to push back Rwanda-backed M23 rebels who have taken control of the mineral-rich Eastern Kivu region. In return, Tshisekedi offered preferential access for the US companies to essential energy transition minerals to help the US compete in the critical minerals race with China.  

The resolution of the AVZ expropriation is now aligned to a web of agreements of a US-Rwanda-DRC deal signed on June 18, to be ratified on June 27, which could grant US companies more secure access to the DRC’s abundant critical minerals.

KoBold is reportedly ready to spend $1bn bringing the lithium to market rapidly and to suspend arbitration if the DRC returns the mining licence containing the southern part of the deposit and AVZ receives compensation. Meanwhile, Zijin continues to develop a mine in the northern portion of the Manono deposit.

Instability in the Sahel

Unfortunately for mines like Barrick’s that are operating in Mali, Burkina Faso and Niger, the landlocked coup countries now fall under Russia’s “zone of influence”, making any appeal to US or other Western governments or mechanisms ineffective.  

All three countries were part of a wave of coups that have seen the Sahel, from Conakry in the west to Port Sudan in the east, come under military rule. Juntas in Niger, Burkina Faso and Mali have joined forces in a defence and economic confederation known as the Alliance of Sahel States (AES), backed initially by members of Russia’s Wagner mercenaries.

After Wagner announced on June 6 it was pulling out, the AES is now backed by the so-called Africa Corps, another quasi-official military force that answers to the Russian defence ministry.

High on a wave of anti-Western and pro-Russian propaganda, the AES states have systematically sought to expropriate mainly Western mining assets. The most significant was the seizure by the Niger military of French company Orano’s Somair uranium mine and revoking of the mining permit of Orano’s subsidiary, Imouraren, in June 2024. It sent the Orano share price on the Paris CAC 40 into a tumble.

While Burkina Faso’s approach was initially “soft”, seeking to buy gold at market prices at the mine gate, in late 2024 the junta started expropriating mainly Western mining assets – such as Canada’s Sarama Resources’ Sanutura Project – all the while signing nuclear deals with Russia and granting Russian gold companies mining licences.  

Most of these cases have triggered international arbitration – either as a World Bank-backed International Centre for Settlement of Investment Disputes claim or under bilateral treaty terms. Most of Africa’s arbitrations have been successfully concluded in neutral “seats” in Paris or London.

Resource nationalism has been a buzzword since the commodities supercycle swept the continent in the early 1990s. What’s new is the degradation of the commercial rules-based order. So, too, is the brutality with which the tax claims were made – reminiscent of Russian tax police tactics used to suborn foreign businesses in Moscow in the late 1990s.  

The increasing pressure on Western mining companies risks not only corporate profits, but comes with potential personal peril. In November, Mali’s military junta detained Terence Holohan, the CEO of Australian gold miner Resolute Mining, along with two other employees, for 10 days amid a tax dispute like Barrick’s. Resolute Mining’s share price plunged 30% following the announcement of their detention and, following his ordeal, Holohan resigned.  

While the price of gold may continue to climb amid geopolitical turbulence, mining during West Africa’s fresh wave of resource nationalism can be risky and uncertain.

_{Top image: iStock / Getty Images Plus / Currency collage.}