Managing legal risks in complex environments: lessons from the tensions between Barrick Gold and Mali
The recent tensions between Barrick Gold and the Malian government, involving export blockades, arrest warrants against company executives, and the initiation of international arbitration, highlight the major challenges faced by businesses operating in unstable environments. These situations underscore the importance of anticipating risks and implementing robust legal and operational strategies.
Natural resources and economic sovereignty
Since 2020, Malian authorities have intensified their control over revenues from natural resources as part of a broader effort to strengthen the country’s economic sovereignty. This approach aligns with the global trend of "resource nationalism." The recent disputes surrounding the Loulo-Gounkoto mining complex illustrate this dynamic, with Mali demanding several hundred million dollars in additional revenue from Barrick Gold while seeking to retroactively apply a new mining code.
Such scenarios create multiple risks for companies, including operational blockades, reputational damage, and increasingly complex relationships with local stakeholders. Barrick Gold’s decision to take its case to the International Centre for Settlement of Investment Disputes (ICSID) underscores the severity of these tensions and the need for international mechanisms to protect investments.
Anticipating and managing risks in high-pressure environments
In contexts marked by political and legal instability, companies must adopt a proactive and integrated approach to risk management. Three key strategies can guide this process:
Anticipate regulatory changes: Disputes over the retroactive application of Mali’s new mining code highlight the importance of including stabilization clauses in investment agreements to mitigate unexpected legislative changes. Regular analysis of political and regulatory developments helps foresee tensions before they escalate.
Strengthen compliance and transparency: Businesses must ensure that their practices, particularly financial ones, are beyond reproach. Regular audits and enhanced controls over financial flows reduce vulnerabilities to allegations such as money laundering or tax evasion.
Maintain constructive dialogue with authorities: Initiating international arbitration can erode trust and make negotiations more difficult. It is therefore crucial to preserve open communication channels with local stakeholders, even during periods of conflict.
The challenges of international arbitration
While international arbitration, such as Barrick Gold’s case with ICSID, provides a legal avenue for resolving disputes with states, it also has limitations. These proceedings can last for several years, prolonging uncertainty and negatively impacting business operations. Moreover, arbitration can harden the positions of local authorities, complicating prospects for an amicable resolution or the resumption of normal operations.
Toward an integrated and resilient legal strategy
The recent developments between Barrick Gold and Mali underscore the importance of adopting a comprehensive legal strategy that goes beyond dispute management. This strategy must combine anticipation, prevention, and dialogue, while accounting for local specificities and international standards. The goal is to protect investments while minimizing operational and reputational impacts.
Conclusion
The tensions surrounding the Loulo-Gounkoto mining complex serve as a reminder that businesses operating in complex environments cannot rely on a reactive approach. Proactive risk management, incorporating robust compliance mechanisms and a nuanced understanding of local dynamics, is essential to ensuring operational resilience. Specialized legal advisors play a critical role in helping companies navigate these demanding contexts and safeguard the continuity of their operations in uncertain environments.