In a significant development, Mali has enacted a new mining code that could reshape the nation's vital mining industry. The law allows the state to acquire up to 30 percent stakes in new mineral projects, marking a bold step towards retaining more of the industry's revenues.
The signing of the mining code into law by Junta leader Assimi Goita underscores the government's commitment to asserting control over its mineral wealth. Mali holds a prominent position as one of Africa's leading gold producers, but its mineral riches extend beyond gold, encompassing manganese and lithium, minerals crucial for the global energy transition.
In 2022, Mali produced a substantial 72.2 tonnes of gold, signifying the importance of the mining sector to the nation's economy. Gold alone accounts for 25 percent of the national budget, 75 percent of export earnings, and 10 percent of GDP.
However, Mali's mining landscape has long been dominated by foreign companies, including Barrick Gold and B2Gold from Canada, Resolute Mining from Australia, and Hummingbird Resources from Britain. These companies have continued operations despite political instability and an expanding jihadist insurgency.
The new mining code represents a significant shift in Mali's approach to its mineral wealth. It grants the government the right to hold up to 10 percent equity in new mining projects, with the option to acquire an additional 20 percent during the initial two years of commercial production. Additionally, the code opens avenues for the Malian private sector to hold up to five percent.
One notable change is the removal of tax exemptions for mining companies during their operations, potentially injecting significant revenue into the national budget. Economy Minister Alousseni Sanou projected that these changes could boost the budget by a substantial 500 billion CFA francs ($820 million).
Mali's new Mines Minister, Amadou Keita, expressed the hope that the mining industry would eventually contribute to between 15 and 20 percent of GDP. This signals a determined effort to diversify the nation's economy and reduce its reliance on a single sector.
However, the journey ahead is not without challenges. The government must strike a balance between asserting sovereignty and attracting investors. Mali's demand for higher stakes in mining projects aligns with a broader trend across the continent, where resource-rich nations seek greater control over their mining sectors.
As Mucahid Durmaz, an analyst with Verisk Maplecroft, pointed out, Mali is "walking a tightrope" and must tread carefully to avoid deterring potential investors. The delicate balance between sovereignty and investment will determine the success of Mali's bid to "make gold shine for Malians."