- The Washington Times - Wednesday, October 4, 2006

KAYES, Mali

This urban center of 90,000 inhabitants is the closest to the plentiful gold deposits in West Africa’s largest country, but it doesn’t resemble a boomtown.

Most of its roads are bumpy dirt tracks that turn into swamps during the four-month-long rainy season. During daylight hours, groups of men of all ages sit outside, smoking cigarettes and drinking tea.

Several residents complain they haven’t gotten any richer since foreign companies mined more than 20 million ounces of gold in the past decade.

“How could you imagine Kayes being the first region of Mali in which there are three or five gold mines? It lacks the necessary infrastructure,” said Waly Diabira, 28, a local trader.”There’s filth everywhere.”

Five mines operate in western Mali, not far from the border with Senegal, and there are three in the south, closer to Guinea and Ivory Coast.

Several mine executives said Mali’s geology is exciting, which explains why more than a dozen companies, from majors listed on the U.S. NASDAQ index to minors listed on the Toronto Stock Exchange’s Venture Exchange, work here.

“You’ve got to understand that it’s extremely easy to find gold in Mali, especially western Mali,” said Rod Quick, a manager at the offshore Randgold Resources’ Loulo mine, about 140 miles south of here. “I think anyone with the smallest bit of knowledge about geology could go out here and find some rocks that contain gold in it.”

What inspires those seeking precious metals to keep going is the discovery of several major multimillion-ounce deposits, including at the Loulo mine, which yield millions of dollars in profit.

Randgold officials said that their company earns $4 million to $5 million a month from the mine, and that it plans to spend $100 million for an underground expansion that began this month.

“Somebody’s gone before us,” said Ben Adoo, managing director of the Toronto-based African Gold Group’s Ghana subsidiary, which is now exploring in southern Mali. “We think we can follow suit.”

Mali’s minerals are the main attraction for the mining companies, but the country’s democratic credentials and political stability convince them that investing tens of millions of dollars is worthwhile.

Since 1992, a year after the coup that ended the military dictatorship of Moussa Traore, Mali has held elections every five years.

The first democratically elected president, Alpha Oumar Konare, yielded power in 2002 after serving the maximum two terms in office. His elected replacement, Amadou Toumani Toure, enjoys wide popularity ahead of next year’s elections, much of it based on his role in the overthrow of the dictatorship and his unwillingness to cling to power afterward.

Poverty abounds

However, democracy hasn’t enriched Mali’s citizens. In the capital, Bamako, nearly 375 miles from Kayes, Sekou Diabate, a former soccer player who works as a hotel clerk, earns about $80 monthly, with which he supports his fiancee, their daughter and other family members.

Toumani Djime Diallo — a special adviser to Ibrahim Boubacar Keita, president of Mali’s National Assembly and a likely presidential candidate — estimated that three-quarters of Mali’s people live on a dollar or two per day.

“Maybe we’re free in Mali because we can do what we want, but it’s not good when we’re hungry and sick,” Mr. Diallo said.

Randgold doesn’t share Mr. Diallo’s assessment. The company thinks that mining precious metals can help eradicate poverty.

Mr. Quick called it the first step toward development.

“You look at any first-world country, that’s how they all started,” he said. “[Natural resources] is the one asset that Mali has abundance of.”

According to Randgold, the Loulo mine contains 120 to 150 tons of gold in its open pits and underground.

Mr. Quick’s colleague, John Steele, the general manager of capital projects, said an emerging market such as this one can rely on its mining industry to create economic change.

That’s because companies create infrastructure to meet their needs. Randgold built a road to the Loulo mine where one hadn’t existed.

Gold rush

Mining “gives you that burst that a country needs to get their people off the basic agricultural sector and get them into developing industries, and actually lift the country as a whole,” Mr. Steele said.

Although this has not yet happened, Mali’s mining industry has achieved notable gains in less than 20 years. The country is Africa’s No. 3 source of gold after South Africa and Ghana.

Mali’s economy now depends on gold, said Mr. Diallo and mining officials, and the precious metal has overtaken cotton as the country’s primary export.

And certainly, the government is earning money from its mineral resources. It holds a 20 percent share in every operating mine. Private investors such as Randgold and South Africa’s AngloGold Ashanti own the rest.

The government also receives at least 40 percent of a mining company’s revenue, which doesn’t include the 6 percent royalty. But few Malians seem aware of these figures.

Mr. Diabira, the trader, thinks the government’s take is 40 percent, which accounts for the revenue, but not the share in the mines. “It’s not enough for the development of Mali,” he said.

Mr. Diallo said the contracts between the government and the companies are secret. That feeds his frustration with the government.

“We don’t see the benefits,” he said. “Go visit the regions where there’s gold and look around, they’re poor. The populations there, the people aren’t benefiting at all.”

Government apathy

Amadou Konta, the general manager of the Loulo mine, said local entrepreneurs have spent $86 million on Kayes since last year. But beyond its borders, few schools can be found, so the country’s illiteracy rate is high.

Running water is an unimaginable luxury. On the road from Kayes to the Loulo mine, The Washington Times counted members of five families bathing themselves in rain water and runoff.

At the Loulo mine, several Malian employees said the government does a poor job of explaining its gold profits to the public. One of them questioned what it had done with the earnings.

He pointed out that AngloGold Ashanti built the road from Kayes to its Sadiola mine, but that the government failed to improve any of the roads in the surrounding area.

None of this surprised Mbaba Camara, 25, a friend of Mr. Diabira’s.

“Leaders don’t have much interest in Kayes,” Mr. Camara said.

Some Malians worry that their government, despite its rules and regulations, will fail to keep its millions of dollars of profits inside the country.

The government doesn’t have a refinery, and the first loyalty of the companies is to their investors.

As Mr. Camara said: “The foreigners come with their materials and exploit the gold, then they go away.”

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