Violence in Africa’s Sahel region has driven mining exploration companies to put projects on hold, with downstream effects for an industry struggling to expand and fragile local economies.
At least 37 people died and 60 were wounded last November when militants attacked a convoy of Semafo Inc employees, the deadliest attack yet on a mining company in the region.
Islamist groups push south from strongholds in northern Mali and carry out attacks across Burkina Faso and parts of western Niger.
As security costs rise, mining companies exploring for mineral deposits shut down projects in the most dangerous areas.
Resolute Mining, a gold miner, has minority stakes in five exploration companies, one of which – Mako Gold – it advised late last year to halt exploration at a site in Burkino Faso.
“If Resolute isn’t willing to go into a jurisdiction to build and operate a mine, then explorers aren’t going to get the reward for investing and discovering,” John Welborn, Resolute chief executive officer, said on the side-lines of the Mining Indaba conference in Cape Town last week.
“The ecosystem works because little fish get eaten by bigger fish.”
Resolute’s flagship asset is the Syama mine in Mali.
Welborn estimates the company spends $20 per ounce of gold on security at Syama – or around $5.2 million this year, when he expects the mine to produce 260 000 ounces.
Gold explorer Predictive Discovery put Burkina Faso projects on hold after an attack killed a geologist employed by a company joint venture.
“You couldn’t get anybody to go there,” Paul Roberts, managing director at Predictive Discovery, said.
Other projects have been frozen for years. Golden Rim Resources put its Babonga project on hold three years ago because of its proximity to the Niger border.
Unless the security situation improves, the company will abandon the project, managing director Craig MacKay said. The company pays around $10,000 a month to Burkina’s ministry of security for protection.
In Niger, the army has a 20-strong platoon at Global Atomic Corporation’s Dasa uranium project, chairman Stephen Roman said, declining to disclose cost.
Companies hire local labour when possible, to keep a low profile.
“Your acceptance in the community is your biggest protection,” Mark Bristow, CEO of Barrick Gold Corp, which manages Mali’s biggest mine, said.
Despite the security risk, low production costs make the region attractive. For established miners, the costs of shutting down and leaving are higher.
West African Resources, whose Sanbrado mine is in central Burkina Faso, aims to pour its first gold by mid-2020.
Semafo – whose Boungou mine is shut since the November attack – aims to restart the mine in the fourth quarter.
Mining powers economies in the Sahel.
In Burkina Faso, mining represents 70% of export receipts and contributes 15% of government’s budget, mines minister Oumarou Idani said. Insecurity has hit gold production.
“During these times it’s important to stand by these countries and continue to operate and invest,” said Sebastien de Montessus, CEO of Endeavour, which aims to be Burkina’s biggest gold producer in 2020.