The Effect of Mali’s ECOWAS Sanctions on Barrick Gold
Recently, the Economic Community of West African States (ECOWAS) placed sanctions on the African country of Mali, which has many international businesses in the area. Barrick Gold is one of the many companies that do business in Mali, with their gold mine in Loulo-Gounkoto. Below we will discuss how these sanctions affect Barrick and what it will mean for their mine in Mali.
What are the Sanctions Placed on Mali by ECOWAS?
ECOWAS has decided to recall members from Mali as the current political climate worsens. According to the Global Observatory, Mali is closing its borders, both land, and air, to ECOWAS countries. Many products will also be ineligible for transactions with ECOWAS countries and companies lying within those countries. Malian assets have also been frozen in ECOWAS banks. ECOWAS has also declared the suspension of assistance financially to Mali.
These may seem like extreme measures to take against a country, but ECOWAS feels that the current tensions within the country of Mali have triggered such extreme action.
Previously, Malian civilians staged a coup to usurp the government when the President and Prime Minister failed in their duties. The coup disrupted the election calendar and ECOWAS expects them to have another within an 18-month period. Once the election has been held and the proper authorities placed into office, ECOWAS will drop the sanctions placed on Mali.
Barrick: A Leader in Gold
Barrick Gold operates in thirteen different countries, including New Guinea, and Saudi Arabia. The worldwide company saw its shares increase by 125% in 2020 and have seen similar gains since. An in-depth review of the company was written in this link, https://investingingold.com/barrick-gold-review/, by Investing in Gold. Below we showcase some of the aspects that make them one of the top gold mining companies. Their operations work with local governments and provide a boost to economies by providing jobs for locals.
The company focuses on safe mining practices that have minimal impact on the environment. They care about more than just producing ore. Barrick develops the countries they mine socially and economically as well. Their policies allow them to invest in business partners they find to be mutually responsible and increase job opportunities in the area accordingly.
Not only is the company a great investment, people like it because of its environmentally friendly policies and how well it treats locals in the countries they are mining. In the past mining operations have been equated to slave pits, but Barrick Gold is looking to rebrand its industry with a positive look.
That said, Barrick is not required to continue business in Mali. It is their choice to continue working despite the sanctions that require them to do business in a less convenient manner. They may not sell their gold to ECOWAS countries, which will lead to higher costs initially, but should Mali be able to instate a newly elected president and prime minister within the time allotted, the sanctions will be raised, and Barrick will still have the relationship they have maintained with the country.
Barrick Gold in Mali
In the last nineteen years, Barrick Gold has merged with Randgold. Randgold has had a history of mining Malian gold since 1996. Barrick has been working with the Malian government and in the country to mine gold and their mine accounts for 40% of the gold produced from Mali.
Barrick Gold is an important asset of the Malian government and has worked openly with them since the merger. Most recently, Barrick Gold was able to transition to a new government within Mali in 2019. For more information on the transition, click here. With the current state of the government in Mali, Barrick’s mine has continued with its work.
The mine is currently owned 80% by Barrick and 20% by the Malian government and the partnership is believed to be just as strong as ever. In the two-decade life of the mine, it has produced over 209 tons of gold. Not only is it an important asset of Barrick, but it is also important for Barrick Gold to continue running the mine in Mali.
If the mine were to shut down and not re-open, the country would lose jobs and the economic and social opportunities granted from having Barrick running their operation in the country. This could lead to more socio-economic unrest within the country and further turmoil between the country and ECOWAS. There is currently no statement on what the company may do should the time allotted come up and Mali not have an elected official in place.
The ECOWAS Decision and How it Effects Barrick Gold
As the company is tied into the Malian government so tightly, Barrick has taken measures to work within the borders of Mali with their mine. This has given them the ability to continue working within Mali though they are international. The ECOWAS Sanctions will be followed closely while continuing to bring social and economic opportunities to Mali.
The transition is key to not only keeping the mine functioning but bringing Mali into a state where there can interact with ECOWAS countries again. Should the transition go smoothly, Mali will remain a democratic government and Barrick will be able to continue operations in the area. As of writing, Barrick has expressed no plans to move the operation out of Mali.
The relationship between Mali and Barrick Gold is mutually beneficial and continuing the path together will prove the strength of the bond between the two. Barrick is a company that is looking to better the world just as ECOWAS is looking to improve West Africa. By working within these sanctions, they are showing ECOWAS Mali is willing to work within restrictive measures and find alternative routes should they have to.
Barrick Gold was able to navigate the transition in government previously and will doubtless navigate this one just as successfully. With a prowess unseen in previous decades, Barrick is on track to overcome all expectations and garner even more support from its shareholders.