A trade embargo placed on Mali by the majority of its neighbouring West African countries could affect its vital gold export sector in the coming months should a détente fail to be swiftly reached, analysts say.

On January 9, the Economic Community of West African States (Ecowas) imposed sweeping sanctions on Mali after the country’s military government postponed elections due to take place next month.

Tensions between the Ecowas regional bloc and Mali have been building since the military junta led by Colonel Assimi Goïta staged an initial coup in mid-2020.

A transitional government was installed following discussions between the military and Ecowas that year, but last May, Goïta’s forces overthrew the interim prime minister and president.

Ecowas suspended Mali from the economic community in response to the second coup and targeted members of the transitional government with travel bans and asset freezes.

Relations deteriorated even further this month after the military junta proposed elections should instead take place by the close of 2025, a timeline Ecowas said was “totally unacceptable”.

After an extraordinary meeting in Ghana a little over a week ago, Ecowas immediately closed land and air borders with Mali; suspended non-essential financial transactions barring those needed for vital products, such as food or medical supplies; and froze Malian state assets held in Ecowas central and commercial banks.

Robert Besseling, founder and chief executive of specialist intelligence company Pangea-Risk, which provides analysis of political, security and economic risks across Africa and the Middle East, says the trade embargo will “cause chaos at the border and lead to huge delays for imports”.

Anything apart from essential supplies such as medicines, including Covid-19 vaccines, as well as food and possibly fuel, will be blocked from entering the country.

Nevertheless, Besseling tells GTR the suspension of non-essential financial transactions is the most important sanction for trade in the near term.

“The central bank has closed off any foreign transactions, so the country will very quickly run out of cash and will not be able to pay for non-essential imports. Mali has also essentially been frozen out of its own assets, its own banking sector,” he says.

He points out West Africa’s central bank blocked Mali’s attempt to raise around US$52mn in treasury bills last week.

“Without that type of cash and T-bills being issued, Mali’s government won’t be able to pay their own public payroll; from a trade perspective, they won’t be able to meet receivables either anymore. So that is going to be the immediate impact.”

Alexandre Raymakers, senior Africa analyst at strategic consultancy Verisk Maplecroft, agrees that the “real play” by Ecowas countries is squeezing the Malian state financially, with a view to bringing the military government back to the negotiating table.

How long the military government can last remains to be seen, though Raymakers says the general consensus is that Bamako has enough cash to carry them through the next three months.

“The military government is going to have to rely on its reserves and any sort of form of revenues it can gain from gold exports, if it can,” Raymakers tells GTR.


Impact on gold?

While the impact of the Ecowas sanctions on Mali’s prized export sector, gold, is unlikely to be felt in the coming days or weeks ahead, experts say mining companies could see their operations disrupted if the impasse drags on.

Gold comprised more than 80% of the country’s exports in 2020, and accounting for around 10% of GDP that year.

Besseling notes that when the military junta staged its first coup in 2020, sanctions imposed by Ecowas at the time had minimal effect on the roughly 13 gold mines run by multinational companies because the embargo only lasted a matter of weeks.

“Companies like Barrick Gold from Canada, or Hummingbird resources in the UK or AngloGold Ashanti –  there are a whole bunch that saw their share prices take a knock, but the actual operations were not impacted hugely because they could continue to move gold across the border with Guinea and fly it out directly.”

In recent days, international gold mining companies have said there has been no discernible impact on their mines in Mali.

As reported by Reuters, Canadian miner B2Golds’ Fekola mine in Mali is operating normally and remains unaffected by Ecowas sanctions, while Australia’s Resolute Mining said operations at its Syama mine has seen no immediate impact on production and supply, or the safety and security of employees or contractors.

According to Reuters, Mali’s biggest gold producer, Barrick Gold, also said on January 10 that its Loulo-Gounkoto mining complex had sufficient supplies to continue operating normally, but that it was closely monitoring the “very fluid” situation.

“Whilst all plans will be made to minimise the potential impact it is too early to say how these sanctions may potentially affect our business,” Hummingbird Resources says in a statement.

The company, which owns the Yanfolila gold mine in Mali, added that it would provide further updates when appropriate.

Complications could arise, however, if the trade embargo drags on for longer than two or three months, Besseling says, as mines begin to run low on essential supplies such as concentrates and chemicals.

“In the short term, the impact on gold miners’ actual operations will be almost negligible. But the longer these sanctions last, it will definitely will have a negative impact and lead to serious disruption for the sector,” he adds.

“The question is how long the sanctions go on. If they have a mechanical failure at a mine, they may not be able to fly the necessary parts in to fix these problems,” Verisk Maplecroft’s Raymakers tells GTR.

There are also signs that countries outside of Africa will support Ecowas and impose their own sanctions on Mali’s military government, which could add to complications for gold miners in the country.

The EU has endorsed the Ecowas sanctions and said it will fall in line with them, while the US has had its own sanctions in place since 2019, and may look to expand these as well.

“The longer that this standoff lasts, the EU, the US and others will impose their sanctions, and that then could have an impact on gold mining… If Canada, Australia or the UK start to impose their own sanctions, then of course, these are the places where these companies are registered and listed,” Besseling says.

“They would effectively not be allowed to work in Mali anymore under threat of sanctions,” he adds.