Already a significant gold producer, Mali’s mining sector is poised for further growth after the country’s Chamber of Mines recently tripled estimates of the country’s bauxite reserves, following several new discoveries. This is good news for Mali and miners alike; yet it’s not all positive. Mali’s mining sector faces many challenges ahead – including ending child labour and improving transparency – if it is to truly prosper from its natural resources. Heidi Vella investigates.
Landlocked between six other West African nations, including Burkina Faso and Guinea, Mali is a gold mining star in a resource-rich but troubled region.
The nation is the third-largest gold producer in Sub-Saharan Africa with seven projects currently in operation. UK mining firm Hummingbird Resources?is the latest company to get involved and is on course to start production at a $88m (£68.1m) open-cast gold mine this year.
Yet only about six of the country’s 133 potentially gold-rich reserves have been mapped out, offering significant growth opportunities.
Furthermore, the government is keen to unlock the economic potential of its other resources, such as bauxite, manganese, lithium and uranium. In April, the Chamber of Mines announced that following several new discoveries, bauxite reserves in Mali’s Falea project are now estimated at 1.63 billion tonnes (Bt), which is equivalent to 572t of refined aluminium. A spate of investment deals signed with China, totalling about $11bn, aims to unlock the potential of other minerals.
In fact, BMI Research forecasts that Mali’s mining industry will experience a value growth of 10% from 2017 to 2021, putting it above top African mining markets, such as the Democratic Republic of Congo (DRC).
While an increase in mining activity in Mali seems unstoppable, like many other resource-rich African nations, mining in the conflict and poverty stricken land is complex, troublesome and often detrimental to the most vulnerable.
Widespread artisanal gold mining by poverty stricken communities in the West has fuelled child labour and uncontrolled use of harmful mercury. Militants fighting in the north has also created instability in the country.
Furthermore, on 24 June, the Extractive Industries Transparency Initiative’s (EITI) independent validation board ruled that while the country had made significant progress in the face of political instability and conflict, it is not yet compliant with the expectations of the the new EITI ‘gold’ standard. . The board noted that government oversight was inadequate in some areas. These included problems with conducting multi-stakeholder engagement (with communities and other stakeholders), reliability of data – audits from government bodies charged with collecting revenues from the extractive sector were inadequate – and for local transfer of money and investment, as final figures for money earmarked for local communities were not disclosed.
Mali’s Government now has 18 months to make significant improvements in the areas highlighted by the validation board or face being suspended from the initiative altogether, which could be negative for the country as holding the EITI standard is a sign of stability and strong and stable governance for potential investors.
Mining transparency and operations
“Everybody is impressed by Mali,” says Bady Baldé, despite the validation board’s findings. Baldé is the regional director of Francophone Africa at EITI.
“If you compare Mali to all the countries that have become compliant today, Mali compares favourably to these countries, despite the environment of conflict and instability,” says Baldé. “From an investor perspective, I think it is an indication of a strong foundation, if you will, that Mali has and can build on.”
He notes that the compliance of companies operating in Mali, such as Randgold Resources which has two projects, has been key to the process and reaching these results.