Mali, a prominent gold producer in Africa, has been making strategic moves to enhance its gold refining capabilities. In November 2023, Mali signed a memorandum of understanding with Russia to construct a gold refinery in Bamako, aiming to process up to 200 tonnes of gold annually, positioning it as the largest in West Africa.

Background and Significance

Gold plays a pivotal role in Mali’s economy, accounting for approximately one-quarter of its fiscal resources. In 2022, the country produced 72.2 tonnes of gold, with industrial production contributing 66.2 tonnes, marking an 8.4% increase from previous years.

Despite being a leading gold producer, Mali has historically lacked substantial refining infrastructure, exporting most of its gold in unrefined form to countries like South Africa, Switzerland, and Australia.

Details of the Agreement

The agreement between Mali and Russia entails the construction of a gold refinery in Bamako with a capacity of 200 tonnes per year. This memorandum is valid for four years, although specific timelines for the construction and operational phases have not been disclosed. Malian authorities anticipate that this refinery will enable better control over gold production and ensure accurate application of taxes and duties.

Implications for Mali

Establishing a domestic gold refinery of this magnitude is expected to have several benefits for Mali:

• Economic Benefits: By refining gold domestically, Mali can capture more value from its gold production, potentially increasing national revenues and reducing dependency on foreign refineries.
• Regulatory Oversight: A local refinery allows for more stringent monitoring of gold flows, aiding in the enforcement of tax regulations and minimizing illicit trade.
• Employment Opportunities: The construction and operation of the refinery are likely to create jobs, contributing to local economic development.

Geopolitical Context

The collaboration with Russia signifies a shift in Mali’s international alliances. Following a coup in 2021 and the subsequent withdrawal of French forces in 2022, Mali has been strengthening ties with Russia. This partnership includes not only the gold refinery project but also agreements in sectors like energy and mining exploration.

Challenges and Considerations

While the refinery project holds promise, several challenges need to be addressed:

• Political Stability: Mali’s recent political upheavals could impact the timely execution of large-scale projects.
• Infrastructure Development: Building a refinery requires substantial infrastructure, including reliable power and transportation networks, which may necessitate additional investments.
• Environmental Concerns: Gold refining involves processes that can have environmental impacts, necessitating stringent regulations to mitigate potential harm.

Conclusion

The agreement to build a gold refinery in Bamako marks a significant step for Mali in maximizing the benefits of its gold resources. By moving up the value chain, Mali aims to enhance economic gains, improve regulatory oversight, and strengthen its position in the global gold market. However, successful implementation will depend on addressing the associated challenges and ensuring that the project aligns with sustainable development goals.