For the past few years, Mali’s industrial gold production (as reported by the Malian government in various press outlets) has been trending upward:
This is surely good news: add rising production levels to the climbing value of gold on world markets and you have a growing benefit to the Malian economy and the Malian treasury. Mali has become Africa’s third-largest gold producer and is ranked sixteenth globally. Gold is by far Mali’s most valuable export, accounting for some three-quarters of official export earnings in 2019.
“Industrial production” of Malian gold comes from large mines operated by transnational firms like Barrick, Randgold, or Resolute. These companies invest massive capital to extract ore from the ground, usually from huge open pits. Together, they account for the vast majority of Mali’s annual gold production. “Artisanal gold production,” which has consistently shown up in government estimates as a paltry six tonnes per year, has been a sideshow in which desperate, pick- and shovel-wielding local men scratch around for anything too insignificant for the big players.
Or at least that’s what I used to think. But what if industrial production is actually the sideshow in Mali’s gold exports?
The above report by France 24 shows that a great deal more gold comes out of Mali than those official production figures suggest. Much of Mali’s artisanal gold is smuggled out of the country, while at the same time Mali has also become a transshipment point for gold smuggled from neighboring states (Cote d’Ivoire, Guinea, Senegal, Sierra Leone…). This clandestine activity turns out to have been an open secret since the early 2000s, and its scale can be glimpsed even in official trade figures.
Consider the statistics on the UN Comtrade Database, which reveal enormous disparities between the amount of gold the Malian government has reported exporting and the amount reported as imported by authorities of the United Arab Emirates (which has become a leading and controversial destination of African gold). In 2019, the most recent year with figures from both countries, Mali claimed to export just over half a tonne of gold to the UAE, while the UAE reported nearly 81 tonnes of imported Malian gold. To put that figure in perspective, that disparity amounts to more than Mali’s industrial gold production that year (about 65 tonnes). That extra gold was worth over US$3 billion at 2019 values, none of which wound up in Malian state coffers. And the Mali-UAE gold trade is ramping up: in 2021 (a year for which Mali has not yet reported figures in the database), Emirati officials reported a whopping 174 tonnes of gold from Mali, nearly triple the amount of Malian industrial production that year.
According to a 2019 Reuters report, many other African countries share this problem of wide gaps between the gold exports they register and the imports logged in Dubai. But Mali’s gap seems to be the widest:
(Authorities in gold-importing countries have reported a wide range of numbers. Switzerland, the second biggest importer of Malian gold according to Mali government figures, shows almost no disparity between Malian exports and Swiss imports in the Comtrade database. South Africa, destination of $1.3 billion worth of Malian gold in 2019 alone as reported by Mali, has reported no Malian gold imports to the database since 2002! Meanwhile, France has been a marginal player, importing a cumulative 2.2 tonnes between 1994 and 2019.)
Wait, if Mali’s artisanal production is only six tonnes per year, where is all that additional gold coming from? Those estimates of artisanal production must be way off: Reuters estimated in 2016 that artisanal gold accounted for not a tenth but a third of Mali’s national production, and cautioned that the actual share could be even greater. The France 24 estimate puts it closer to half of Malian production, or about 60 tonnes, which is ten times the government’s guess. Those 174 tonnes of gold the Emiratis reported in 2021 had a declared value of $7.3 billion. Unregistered exports at anything near those levels constitute a huge amount of capital flight, taking place under the noses of Malian authorities. If the central government were able to collect its three-percent export tax on all that gold, it would gain hundreds of millions of dollars to spend every year on defense or social programs.
Apart from its contribution to the state treasury, gold production doesn’t contribute much to Mali’s formal economy. It recruits most of its skilled workers abroad, generates little employment locally, and in general confers few benefits. Artisanal mining at least creates jobs in the communities where it takes place (an estimated three million such jobs in Mali, Burkina Faso, and Cote d’Ivoire), though many are held by immigrants from neighboring countries. As long as the state doesn’t regulate or tax artisanal mining properly, this sector represents an enormous loss to the national economy. Supporting a strong and effective Malian state means supporting measures to monitor artisanal gold production and tax its exports, as well as to regulate the labor and environmental conditions at artisanal mines.
Finally there’s the problem of who’s profiting from those artisanal mines. In the France 24 report above, aerial footage of one artisanal mine in the Gao region makes the point that artisanal mining does not necessarily mean “small-scale” or unorganized. The site in question, replete with heavy equipment, has been completely outside Malian government control for years, and both separatist rebels and jihadi groups have been taking a cut of its revenue.
Mali’s industrial producers are by no means off the hook. Reports by Mali’s Verificateur Général in recent years have uncovered financial irregularities in the operations of the big mining firms, and the Malian government has announced plans to audit the mining sector. But all those irregularities add up to a few million dollars in any given year–a paltry sum, considering all that gold that’s vanishing from the country. Concentrating on fixing the irregularities in the industrial mining sector while ignoring the hemorrhaging of national wealth from artisanal gold would be like closing the window on the barn while leaving the barn door wide open.
Postscript, January 2023: I have published an expanded article on this topic in the winter issue of MERIP.