Written by Kola Sidibe
Mali's mining sector, particularly gold mining, has been a cornerstone of its economy for years. The country's rich gold deposits have made it one of Africa's top gold producers, contributing significantly to its economic vitality. The revenue generated from gold mining has played a crucial role in funding government initiatives, providing jobs, and supporting local communities.
Mali's mineral wealth extends beyond gold and includes resources like iron, manganese, and lithium, which are becoming increasingly important in the global transition to renewable energy sources. But a new law in 2023 has significantly changed the equation for mining and foreign investment in the country.
What implications could it have on the economy and the future of the sector?
Malian Gold: An Economic Mainstay
Gold is a valuable natural resource that Mali has been exploiting for several decades. In 2022 alone, Mali produced 72.2 tons of gold, including six tonnes by artisanal gold panners. This production has had a profound impact on Mali’s economy.
According to data from the Minister of Mines, it contributed 25% to the national budget, 75% to export revenues, and 10% to GDP. Predominantly, Malian gold is extracted by foreign companies including Canadian firms Barrick Gold and B2Gold, Australian company Resolute Mining, and British firm Hummingbird Resources.
Bolstering National Sovereignty?
The Malian military government that assumed power in 2020 expressed its intent to leverage more benefits for the country from its mineral wealth. In line with this vision, a new mining law was enacted in August 2023. This law introduces several pivotal changes:
Increased State Participation
The Malian state can now hold up to 30% stake in new mining projects compared to 20% previously. Additionally, it has an option to acquire an extra 20% during the first two years of commercial production.
Participation of Local Private Sector
The new law also mandates a 5% stake for the Malian private sector, raising total national participation to 35%.
End of Tax Exemptions
Tax exemptions previously granted to mining companies during operation have been abolished. This is expected to boost state revenues.
Local Development
The reform includes provisions for local development funds and road construction aimed at redistributing profits from the mining sector at the local level.
Impact of the New Law
The mining industry's response to the new law has been multifaceted. Established mining companies operating in Mali, such as Barrick Gold and B2Gold, appear to be cautiously optimistic, as the law is structured to protect existing investments and contracts. These companies seem reassured that the law is designed not to disrupt their ongoing operations.
However, there are concerns about the law: The mandate increasing the percentages of state and local participation will no doubt bring new opportunities for the domestic economy, but has the potential to discourage new foreign investments.
While the government seeks to assert greater control over its mineral resources, it must strike a delicate balance to avoid deterring international mining companies from contributing to Mali's mining sector's growth. Foreign investment is essential to developing untapped mineral reserves and expanding the mining industry.
Final Note
The adoption of the new mining law in Mali marks a pivotal moment in the country's mining history. It reflects a commitment to asserting national sovereignty over its mineral resources and ensuring that the benefits of mining are more equitably distributed among its citizens. The law has the potential to provide Mali with greater economic self-reliance, strengthen local communities, and fund much-needed development projects.
However, finding the right balance between national control and foreign investment will be critical for the law's success. Mali's challenge is to foster an environment where foreign mining companies see opportunities for growth and profitability while the country retains greater ownership of its mining ventures.
The coming years will be instrumental in evaluating the law's actual impact on Mali's mining sector, its economic trajectory, and the lives of its people.