Lessons from Mali
Share Article
Lessons from Mali
Investing in exploration or mining projects in West Africa and the Sahel has become a high stakes game.
The recent decision by Mali’s military government to revoke more than 90 mining exploration permits in the country should raise all red flags for investors in this region of the African continent.
According to a report by Reuters, the decree was signed by Mali’s Mines Minister Amadou Keita last week and affects permits issued between 2015 and 2022.
According to the Reuters report, the decree lists affected local subsidiaries of major names, including Harmony Gold, IAMGOLD, Cora Gold, Birimian and Resolute Mining.
West Africa face extreme challenges
Parts of West Africa and the Sahel face a growing list of challenges including amongst others violent extremism, military coups, political instability and transnational crime. Moreover, the region has become an arena for rivalry between major world powers like Russia, China, France and the USA.
State institutions in most countries in the region are regarded as corrupt, and the governments listed as fragile or failed states. Military intervention has worsened the situation on the ground and is often ineffective at improving security and ensuring stability.
Mali’s decree on exploration licenses is a clear reminder that resource nationalism and political instability in parts of West Africa and the Sahel are not abstractions but real, immediate risks for investors.
It is also a reminder that betting on and entering fragile jurisdictions as an investor is much more than simply assessing media reports, whisking in and out of a country, staying in high-end hotels and attending 2 or 3-day events and conferences, while trying to read between the lines of international media reports. That investment can be much better spent on gathering intelligence on the ground.
Exploration licenses used as a political tool
The Mali example shows how quickly tenure can change in Africa and how exploration and mining licences can be used as a political tool that reshapes who benefits from the resource rent.
This reality makes robust, boots-on-the-ground intelligence non-negotiable. Desk-top studies and glossy risk matrices cannot stand in for local political mapping, stakeholder and community interviews and discreet fact-finding missions.
However, even on the ground expeditions and fact-finding missions in fragile frontier markets do not eliminate risk, they make it manageable and priced into the deal.
The lesson is blunt: treat fragile states like complex political projects, not merely geological opportunities.
Commit resources to continuous local enquiry, legal certainty and community legitimacy before spending on exploration. Shortcuts save time but not sovereign will. The Malian cancellations are a costly lesson, and one avoided by serious, on-the-ground diligence.
Image credit Alexander McKinley from Unsplash
Lessons from Mali