On Friday, 8 November 2024, the CEO of Resolute Mining (Resolute), Terence Holohan, with two accompanying employees were detained by the Malian authorities while negotiating outstanding payments and the impacts of a legislative change (2023 Mining Code) on the Syama gold mine. The Syama gold mine is held by Sociêtê des Mines de Syama (SOMISY), a subsidiary of Resolute. Resolute has an 80% stake in SOMISY, with the Malian government holding the remaining 20%.
Resolute is based in Perth, Western Australia, while the detainees are British nationals. Mali is a landlocked nation located in resource rich West Africa. This incident is largely a result of the 2020 government coup undertaken by Malian soldiers.
Resolute temporarily ceased trading on the Australian Stock Exchange as the value sharply declined in response to the news. Trading appears to have been suspended from the 14 – 18 November, resuming as Malian officials and Resolute reached an agreement.
A memorandum of understanding, referred to as the Protocol, settles the current outstanding claims against Resolute. Resolute has agreed to pay approximately US$160 million, with an initial payment of US$80 million. The Protocol also provides a framework for further negotiations regarding the long-term future of the Syama site including Resolute’s compliance with the 2023 Mining Code. While an agreement has been reached resolving the immediate issues, this matter is far from concluded.
The Malian government has been vilified in the reporting of the incident by Australian liberal media, conveniently excluding the brutal history of imperialist colonial exploitation and struggle in the region. This post aims to give readers an insight into the politics of resource extraction/ownership and investor/state dispute resolution on the African continent.
Australian miners are prolific in West Africa. This is simply an extension and expansion of the nation’s propensity for colonial exploitation. Australia offers a legislative haven for these kinds of activities with the proverbial blessing of their colonial counterparts in Europe and the United States.
A brief history of Malian leadership
Modern day Mali was colonised by the French in 1892. The French violently exploited the labour and resources of the Indigenous Malian People, renaming the area French Sudan. The French occupation was met with consistent resistance. After intense political pressure following WWII, France relented in 1958. Mali gained full independence in 1960 under President Mobido Keïta. President Keïta sought to establish a socialist state, abandoning the CFA franc, criminalising slavery and nationalising the country’s resources with Soviet support.
Losing control of Mali’s monetary system, labour and resources was intolerable to American and French imperialist forces. They began to pressure President Keïta to rejoin the Franc Zone through 1967. President Keïta refused, and a coup followed in 1968. Moussa Traoré, ostensibly supported by the western imperialists, took control of the Malian government unwinding the policies of the previous government returning to the Franc. Following the coup, Keïta remained in prison until his death in 1977.
Despite persistent civil unrest, the western backed government remained largely unhindered until 1985. Neighbouring country Burkina Faso, led by Thomas Sankara, challenged the Malian government along the border in support of the Malian civilian resistance.
The border dispute was heard in the International Court of Justice (ICJ); however, this did not resolve the matter. While the ICJ did makes orders concerning border lines, Sankara was substantially concerned with the liberation of the Malian civilian population from western imperialism. Fearful of losing the ability to exploit the labour and resources of the Sahel nations, the western imperialist forces arranged for the assassination of Sankara in 1987.
With Sankara gone, may he rest in power, western backed President Traoré had survived. After this near loss, his government sought to secure supremacy by appealing to the International Monetary Fund (IMF). Obtaining development loans from the IMF enriches the ruling and owner classes at the expense of civilians.
The IMF requires the privatisation of the receiving nations natural resources and agricultural land, limiting the nations’ ability to service the debt. However, the IMF still demands payment and will insist on austerity to meet such ends. This process is called debt trap diplomacy, ensuring the resource rich nations of Africa will be condemned to violent debt servitude while imperialists steal their wealth. Though the Malian people do not accept these oppressive terms, they resist.
To the west’s dismay, President Traoré was deposed in 1991 and replaced by anti-imperialist Amadou Toumani Touré. President Touré became the transitional leader while democratic processes were established. An election was held in 1992 where the Malian people elected Alpha Oumar Konaré. President Konaré held office for two terms leaving government in 2002. President Konaré was exceedingly popular, looking to improve the conditions for the Malian population rather than exploit them as the previous pro-west leaders had.
Amadou Toumani Touré returned to office as President Konaré left. This arrangement remained until Muammar Gaddafi was murdered in NATO’s regime change efforts in Libya, 2011. Gaddafi had set out to create a pan-African gold backed currency, such a measure would have liberated Africa from the violent destructive financial conditions imposed by western imperialism particularly the CFA Franc.
The NATO backed Islamist groups and anti-black insurgents used to destabilise Gaddafi’s Libya moved to surrounding nations, including Mali. In the chaos, Mali suffered through another imperialist coup in 2012. The three successive leaders following the coup, Amadou Sanogo, Dioncounda Traoré and Ibrahim Boubacar Keïta (IBK), implemented and maintained a western style pseudo democracy.
Both French and American forces took the opportunity to expand their military positions in Mali, claiming to assist in correcting the destabilisation they themselves caused. The French labelled their occupation, Operation Barkhane. The US military supported the French through the United States Africa Command (AFRICOM).
Dissatisfied with the western presence in Mali, the civilians once again rose to the occasion in 2020. Mali’s capital, Bamako, flooded with protestors demanding IBK resign. Malian military dissidents arrested IBK, though he was allowed to resign and flee the country the following day. Again, Mali had an anti-imperialist leader, Assimi Goïta. Another successful coup, supported by Russian forces.
Goïta with the National Committee for the Salvation of the People decided to transition to civilian rule, appointing President Bah Ndaw to oversee the change. Though it quickly became apparent Ndaw did not have the same anti-imperialist goals as his appointors. Ndaw had indicated he would comply with the Economic Community of West African States’ (ECOWAS) demands. ECOWAS is a supposed economic alliance established by French, British and Portuguese colonies on the African continent. This was unacceptable to the coup leaders, who deposed Ndaw May 2021. Goïta took office once again as the current President of Mali.
Mali’s 2020 coup inspired military uprisings across the Sahel with Burkina Faso following in 2022 and Niger in 2023. The three, now anti-imperialist, nations have joined to form the Alliance of Sahel States (AES) with the goal of attaining and securing freedom from western control. Currently, the AES nations are still using the CFA franc. The grouping has announced plans to develop a new currency, freeing them entirely from French control. The French military was forced out of Mali in the second half of 2023, though, they of course still maintain control of the CFA franc. AFRICOM still maintains a presence in the region though that is not likely to last.
The Syama gold mine
The Syama gold mine was developed by BHP during the 1980s, presumably under the dictate of the IMF. The mine changed ownership on two occasions, purchased by Randgold Resources, now known as Barrick Gold (Holdings) Limited, in 1996. The site was sold to current owners, Resolute, in 2004. Resolute purchased Syama for US$6 million, assuming US$7 million in associated outstanding liabilities.
Reports suggest, as part of the sale contract, Resolute had agreed to pay approximately US$15 million in royalties, on 4 million oz t of gold extracted, to Randgold. The deal was finalised when the spot price of gold was around US$350 oz t, the current price is more than US$2,700 oz t. Syama is purportedly the world’s first fully automated mine.
The following year Randgold commissioned the development of another gold mine in Mali, the Loulo-Gounkoto Complex (the Complex) held by subsidiary Société des Mines de Loulo. The government of Mali maintained a 20% stake in each site. Both mines are expected to remain operational past 2030. As Malian leadership altered the legislative regime applicable to foreign investors, disputes ensued.
*Randgold will be referred to as Barrick for the remainder of the post, the name changed arose from a 2018 merger.
Resolute’s dispute
As a part of sweeping legislative reforms the Malian government implemented the 2023 Mining Code (the Code), giving Malian authorities greater control over their own resources. The Code sets a new minimum for state ownership in foreign assets, lifting from 20% to 35%. The government also began requesting payment for outstanding taxes and dividends.
Prior to Resolute’s visit to Mali, Barrick was attempting to resolve disputes over the Complex. There were anonymous reports in mid-September that 4 senior Barrick employees had been arrested in Mali for alleged financial crimes, Reuters noted Barrick had declined to comment on the matter. However, Barrick released a statement September 30, 2024, acknowledging the existence of a dispute, suggesting a settlement had been reached. It now appears reports of a settlement may have been exaggerated.
Malian authorities asserted, on 23 October 2024, Barrick had not honoured their interim agreement. In response Barrick denied any wrongdoing, contending the company had paid the government US$85 million early October “in the context of ongoing negotiations”. This statement would indicate the “existing claims and disputes” had not been settled per Barrick’s September 30 statement. In early October three sources told Reuters the Malian government was seeking US$512 million. Barrick’s mining permits may be left to lapse when they expire early 2026 where Barrick fails to comply with the government’s request. Should the permits lapse, Barrick will now longer be able to extract gold from the complex legally. There is no further information available at the present time.
Having ostensibly watched these events unfold Resolute’s leadership seems to have thought it wise to visit Bamako to discuss “Resolute’s in-country business practices, and to progress open claims made against Resolute, which the Company maintains are unsubstantiated” (Resolute media release). One can only assume Resolute’s CEO, Holohan, had the arrogance to defy Malian authorities, accustomed to impunity in the region. Holohan and his staff were detained for 13 days at the Economic and Financial Centre of Bamako. As noted above, Resolute did agree to pay US$160 million and their staff were released. While Resolute’s mining permit does not expire until 2029, the Code does provide for the withdrawal or cancellation of permits. Resolute would undoubtedly like to maintain access to the lucrative gold deposit.
Adversarial foreign corporations have enjoyed the spoils of West Africa without consequence for far too long, given free reign under western puppet governments. These events are indicative of a changing geopolitical landscape. As the sun sets on the American empire, western capital’s ability to project power across the Global South diminishes. This will have vast implications for investor/state dispute resolution going forward.
Potential legal consequences
There are 3 main ways investor/state disputes may be resolved: negotiation, arbitration and the courts. The biggest risk foreign mining capital faces is expropriation. Expropriation involves substantially depriving “a foreign investor of its ownership, control, or economic benefit in an investment or property located in the governmental entity's jurisdiction” (Thomson Reuters).
The 2023 Mining Code’s change in local ownership requirements could be considered “creeping” expropriation. “Creeping” expropriation as defined by the United Nations Conference on Trade and Development is “a slow and incremental encroachment on one or more of the ownership rights of a foreign investor that diminishes the value of its investment”. Expropriation is not illegal per se. Though it may be considered unlawful where: it is not in the public interest, it is discriminatory, was not carried out through due process and foreign investors are not appropriately compensated.
Holding the site in the local subsidiary, SOMISY, can not guard against expropriation though it can limit the liability. High risk assets are often held by a subsidiary in case of environmental or industrial incidents. Subsidiaries may also be created to avoid tax in the parent jurisdiction or to prevent scrutiny especially where the parent is publicly listed, and labour laws offer minimal worker protections.
Often parties to disputes of this kind will seek to resolve the issues through negotiation. Negotiation is conceptually straightforward, the parties to a dispute arrive at agreement through discussion. The fairness of an agreement arrived at through negotiations will largely depend on power dynamics and leverage.
An agreement between Mali and Resolute was reached through negotiation. Prima facie, it appears Malian officials were in the dominant negotiating position having the power to detain Resolute employees and expropriate Syama. One may only speculate as to why previous governments did not exercise the same power; however, those reasons may include: foreign or private “security” presence, bribery, personal affiliations or puppet leadership.
The success of a settlement arrived at through negotiation relies on parties following through on their agreed obligations. If the parties fail to meet their obligations or cannot agree in negotiations the dispute may escalate to arbitration. Arbitration is a binding and enforceable dispute resolution process. Engaging in arbitration is largely voluntary, commercial contracts often include arbitration clauses. Corporations tend to prefer arbitration as it is confidential and convenient for cross border disputes.
*the following paragraphs are hypothetical/speculative and for demonstrative purposes only
Resolute’s current mining permits were signed prior to the coup in 2018. Under these conditions it’s probable any relevant arbitration clauses would adopt either the International Chamber of Commerce Arbitration Rules (ICC Rules) or International Centre for Settlement of Investment Disputes Arbitration Rules (ICSID Rules). If the dispute was escalated and Resolute were able to attain a favorable award from an arbitral tribunal, which could take several years, they would still be confronted with the issue of enforcement.
Arbitrators have several remedies at their disposal depending on the applicable jurisdiction. Remedies can include both monetary damages and non-monetary damages. Monetary damages are compensatory whereas non-monetary damages are often used to compel certain behaviour. Regardless of the remedies awarded. It can prove difficult if not impossible to have the award enforced.
While arbitral awards are conceivably binding, a nation state may choose to ignore or delay compliance with the award. In such an instance Resolute would have few options. They may petition Mali’s domestic courts for recognition and enforcement of the award, though local courts may reject such pleas. Alternatively, if Resolute could locate relevant assets in another jurisdiction they might petition the courts there for enforcement should there be an appropriate legislative regime to do so. Mali’s state-owned enterprises may well have foreign assets, though they are not likely to be in jurisdictions hospitable to such claims.
If both avenues were to fail, Resolute could attempt to maintain control of the site by force. This would be reasonably difficult and politically problematic especially given the French military was forced from the country. Though, it is probable western forces have already made attempts on Assimi Goïta’s life and are likely to continue trying, so they may regain control of the government and continue to loot Mali’s resources. Though for the time being Mali is on its way to freedom, with the support of the Sahel Alliance, Russia and other BRICS trading partners.