Mali bets new mines will help double gold output by 2018

Thu Jun 6, 2013 10:59am EDT
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LONDON, June 6 (Reuters) - Mali, Africa's third-largest gold producer, expects to double gold output over the next five years to 100 tonnes, hoping for a boost as projects being explored and developed begin to pour bullion, its mines minister said on Thursday.

Despite the chaotic aftermath of a military coup last year that allowed militants to seize control of northern regions, Mali produced just over 50 tonnes of gold in 2012 - a 15 percent increase. It hopes to expand output this year to 57 tonnes.

"For obvious reasons, Mali has not been an easy destination to promote," Amadou Baba Sy told a briefing in London. That is, he said, despite the concentration of gold mines in the country's south, away from fighting between government troops and Tuareg separatists in the north.

"Gold mines have been spared the impact of recent turbulence ... our plan is to support smaller players with a view to getting to 100 tonnes within the next half-decade."

Sy said Mali was conscious of spending cuts hitting producers across the mining industry in the face of cooling prices, as large players face investor pressure to cut back on new developments and smaller producers struggle to raise cash.

He said there would be support from unspecified Gulf banks which could provide loans to junior mining companies operating in Mali - backing a segment Mali expects will be key.

"These private banks came to us, contacted us, and said they had the means to support gold production," Sy said, declining to specify the lenders in question. "They would make loans directly to the small producers."

Sy said there would be over a dozen new mines coming into and towards production over the next five years, naming players such as South African producer Gold Fields.

Gold Fields has a majority stake in the Yanfolila exploration project in Mali, on which it hopes to make an investment decision by the end of the year. That means it has not yet set a date or made a final decision on whether to build a mine, though it is "positive" on the prospect and the region.

Other miners active in the country include Randgold and AngloGold Ashanti.

Mali, which has sought to attract investors with a mining code providing for tax breaks and other perks, is also aiming to diversify away from gold, hoping to encourage investment in bauxite, aluminium, and iron ore.