*

Gold mining CEOs say they won't invest in new mines

*

Mali's new tax, ownership seen as deterrent to new

investors

By Felix Njini

CAPE TOWN, Feb 4 (Reuters) - A new mining law in Mali

that raises taxes and seeks to hand over big stakes in assets to

the state and local investors will need to be loosened up if

gold companies are to invest in new projects there, company CEOs

told Reuters.

The new rules compel companies operating in Africa's second

biggest gold producer to divest a 35% share of new projects to

Malian investors - up from 20% previously - and raise royalty

taxes to 10.5% from around 6%.

Speaking on the sidelines of the annual African Mining

Indaba in Cape Town, three gold mining CEOs with operations in

West Africa said the new rules make it uneconomic to invest in

new mines or buy operations in the country.

Gold, which accounted for 80% of Mali's exports in 2023, has

hit successive record highs over the past year, but the

state's interest and the higher royalty tax are "too much to

encourage investment", one gold mining CEO told Reuters.

"From my conversations with some in the government, there is

a growing realisation that the mining code is too harsh, they

need to loosen some of the royalty (tax) requirements," he said.

"The danger is that, as the taxes become too high and hurt

the level of investment in the country, as gold companies,

because we have choices, we can take our money elsewhere," a

second CEO said.

Mali's junta-led government has proved aggressive in

implementing the new rules, souring relations with top

investors, including world no. 2 gold miner Barrick Gold ( GOLD )

.

Barrick shuttered its Loulo-Gounkoto operation last month

after authorities seized its gold reserves by helicopter and

arrested several of its employees in a dispute related to the

new mining law.

On top of a series of executive arrests and the potential

loss of some $245 million in bullion, Barrick CEO Mark Bristow

also faces an arrest warrant in Mali.

Mali's mines ministry declined to comment. It said when the

review of the previous code was announced in 2023 that an

internal audit had shown it was not receiving a fair slice of

profits from the mining sector while granting too many tax

breaks.

'WE ARE TALKING'

Jorge Ganoza, the CEO for Fortuna Mining Corp ( FSM ), a

Canadian miner seeking to expand in West Africa, said he would

not consider Mali as a potential destination for investment. He

said he expects producers' focus to shift to rich deposits in

Guinea, Ivory Coast, Senegal and Burkina Faso.

The lack of investment in new mines and exploration

activities could shorten the lifespan of existing mines in Mali,

he said. "Do you think Resolute or Barrick today is looking to

expand investments in the country? No," Ganoza said.

Resolute Mining ( RMGGF ), whose CEO was arrested by Mali

authorities last year due to disagreements over the mining

rules, said on Jan. 30 the royalty tax will add about $250 per

ounce of gold to the all-in sustaining costs of its Syama mine

in the country.

The CEOs, who spoke to Reuters separately, cited another

Canadian miner, Robex, as an example of a company

looking to pull out of Mali. Robex, which is struggling to find

buyers for its Nampala mine in the country, said on its website

it was shifting focus to Guinea.

Still, some mining groups are continuing to talk to Mali's

junta on how they can keep working in the country.

Resolute, which agreed to pay $160 million for the release

of its CEO and senior executives who had been arrested in Bamako

last year, said it was continuing discussions on the long-term

future of its mine in the country and migration of its assets to

the new code.

Barrick CEO Bristow told mining investors in Cape Town on

Monday that it had some "challenges" in Mali because of "certain

individuals that... promised more to the junta-led transitional

government".

But, he said, "the important thing is, we are talking".