Resolute CEO detention in Mali comes amid West Africa mining squeeze
Gold miner Resolute Mining Ltd finds itself at the center of a broad shakeup of regulatory regimes across West Africa following the detention of the company’s chief executive in Mali, as cash-strapped governments seek to generate more revenue from their natural resources.
Mali’s military junta — crippled by sanctions and cut off from Western aid — is at the forefront of the push, aggressively pursuing both Resolute and Canadian giant Barrick Gold Corp., which has also had its employees detained and a key license threatened in recent months. But neighboring Niger, Burkina Faso, Senegal and Ivory Coast are also updating mining codes, stripping permits or launching sector-wide audits.
“We’re seeing it across Africa, especially in West Africa,” Chris Eger, Resolute’s chief finance officer, said on an earnings call last month. “It’s unfortunately the environment that we’re living in. As we’re generating a lot more cash because of the gold price environment, one of the, I think, unfortunate byproducts of it is that people are looking for possibly a bigger piece of the pie.”
The moves have come as gold has soared. The precious metal has risen about 30% this year and reached an all-time high of $2,790.10 an ounce amid mounting geopolitical uncertainty in the run-up to Donald Trump’s US election victory.
The detention of Resolute’s boss Terry Holohan follows Mali’s audit of the mining industry and the adoption of new legislation for the sector that raises the state’s share in mining projects.
Although producers including Resolute and Barrick negotiated so-called conventions with previous governments to run their projects, Mali’s junta is putting pressure on foreign firms after revising its mining law.
Next door, Niger’s military government has blocked France’s Orano SA from exporting uranium ore — which contributed to a breakneck rally in the mineral’s price following the ban. Meanwhile, Burkina Faso changed its mining code last year to ratchet up the state’s royalty share, Ivory Coast is changing its tax regime and Senegal’s new government is conducting an audit of the mining sector dating back to 2017.
While Resolute’s shares plummeted by a third on Monday, other mining companies active in Mali also suffered. Kodal Minerals Plc – which is building a lithium project in the country – fell as much as 13%.