John Rubino is a former Wall Street financial analyst and author or co-author of five books, including The Money Bubble: What to Do Before It Pops and Clean Money: Picking Winners in the Green-Tech Boom. He founded the popular financial website DollarCollapse.com in 2004, sold it in 2022, and now publishes John Rubino’s Substack newsletter.
The East African nation of Mali experienced a military coup in 2021.
After settling in, the new “junta” turned its attention to the country’s miners, claiming a bigger stake in projects and demanding commensurately higher tax payments.
First in the crosshairs was Perth-based Resolute Mining. When the company’s CEO came to town to negotiate a new deal, the junta arrested him, forcing Resolute to pay US$160 million in ransom.
Next was the Loulo-Gounkoto mine, run by Barrick, the world’s second-largest gold miner. Authorities confiscated three tons of the project’s gold (worth $245 million), and Barrick closed the mine:
Barrick Gold followed through with its threat to suspend operations at its Loulo-Gounkoto complex in Mali after the military-led government moved gold stocks to a custodial bank.
“Barrick has regrettably initiated the temporary suspension of operations while it continues to work towards a resolution,” the Toronto-based company said on Tuesday.
Authorities airlifted some three tonnes — valued at US$245 million — of the yellow metal by helicopter starting Saturday, Reuters reported on Monday, citing four sources close to the situation and a company memo to employees. The seized amount is worth about US$245 million, the sources said, noting the miner had at least another tonne on site then. It wasn’t clear if it’s since been moved.
The suspension follows months of escalating tensions between Barrick and the Malian government, which claims the miner owes it US$512 million in back taxes. The division of economic benefits from the Loulo-Gounkoto complex, which produced nearly 700,000 oz. of gold in 2023, remains an issue after the government revised its mining code in 2023 to give the state higher stakes in projects. Since early December, it’s restricted gold shipments from the site.
Other companies operating in Mali include Allied Gold (TSX: AAUC), which signed a 10-year deal on its Sadiola mine with Mali in September. B2Gold (TSX: BTO; NYSE-A: BTG) agreed with the government separately the same month on the Fekola mine.
The authoritarian state is among several in a string across the Sahel region, such as Burkina Faso, Niger, Chad and Sudan, facing some of the world’s worst poverty and Islamic insurgents. Most have booted out civilian governments, French colonial-era troops and American aid while pivoting to Russia for help.
They see increased resource nationalism as one way to fund their governments and fight jihadist-linked terror. It’s all made West Africa an increasingly difficult region to navigate for Western mining companies.
The Lesson
Location has always been important for mining stocks, but it’s becoming more so as impoverished or otherwise desperate governments look for emergency funds. We should respond in two ways:
Focus on physical. If gold, silver, and uranium are going up, then start with the ETFs that own the physical assets. They’ll capture the expected price increase without the geopolitical and operating risks that loom large in mining. See here for portfolios that include physical gold, silver, uranium, and platinum ETFs.
When buying mining stocks, stick to safe jurisdictions. Right now, that means the US, Canada, and maybe Australia. The new Trump administration is promising to encourage rather than impede energy and mining. Pierre Poilievre, Canada’s likely next Prime Minister, sounds Trumpian when it comes to commodities. And Australia’s National Investment Fund has begun investing in mining, which is both long overdue and a sign of good policy going forward.So for at least the next few years, the odds of these countries becoming another Mali are low, and the “safe jurisdiction” premium that elevates North American and Australian miners seems justified.
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