Loading ...Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) has initiated international arbitration against Mali over its dispute over its Loulu-Gounkoto mine. This follows a tough statement in response to recent actions by the military junta, saying that conditions had deteriorated to the point where it may need to suspend operations at the mine.
In particular, the government has blocked shipments of gold, arrested local executives, and issued an arrest warrant for Barrick CEO Mark Bristow. Barrick, calling the situation “untenable,” asserted it had negotiated in good faith with the government. Even though its existing contract was valid, it had made “significant concessions.”
The mine, which represents about 11% of Barrick’s NAV, is also responsible for between 5% and 10% of Mali’s GDP. The likelihood is that Barrick would win its arbitration case, but it may take years before a decision is reached, and it is not certain that the government would honor any ruling. Partly, the move by Barrick is a decision to play hardball since its reasonableness has failed to achieve anything.