Burkina Faso Nationalises Two Gold Mines

Burkina Faso has reached an agreement to nationalise two gold mines, Boungou and Wahgnion, in a deal worth approximately $80 million. This transaction comes after London-listed Endeavour Mining had agreed last year to sell the mines to Lilium Mining for over $300 million. The West African state will now assume ownership, marking a significant shift in the country’s control over its natural resources.

Under the agreement, Lilium Mining will transfer ownership of the mines to the government of Burkina Faso. In return, Burkina Faso will pay Endeavour $60 million in cash and a 3% royalty on up to 400,000 ounces of gold produced from the Wahgnion mine. Analysts estimate the royalty could be worth an additional $20 million. The deal was formalised following negotiations mediated by the Burkinabé government.

This settlement also brings to a close the legal disputes between Endeavour and Lilium. Earlier this year, Endeavour initiated arbitration against Lilium, accusing it of missing over $100 million in payments. Lilium counterclaimed, alleging that Endeavour misrepresented key information about the financial and operational state of the mines. Both companies have agreed to drop their legal proceedings as part of the resolution.

Endeavour expressed gratitude to the government of Burkina Faso for its mediation efforts. Lilium, a subsidiary of Lilium Capital, an investment firm founded by US-Burkinabe businessperson Simon Tiemtore, declined to comment on the matter.

Shifts in Resource Control Across Africa

The nationalisation of these mines is part of a larger trend across Africa, where governments—particularly under military regimes—are asserting greater control over their natural resources. In June, Niger’s military junta revoked the mining license of French state-owned Orano at the Imouraren uranium mine, one of the world’s largest. Similarly, Burkina Faso’s move to nationalise the Boungou and Wahgnion mines signals an effort to enhance state ownership and benefits from key industries.

Burkina Faso, Mali, and Niger, which together form part of the Sahel region, have faced significant security challenges over the past decade due to an expanding Islamist insurgency. This has impacted mining operations and resulted in a decline in gold output, prompting governments to revise their mining codes. Last year, Burkina Faso revised its mining laws to earn more royalties from mining companies as part of a strategy to strengthen its control over the sector.

Gold is a critical resource for Burkina Faso, and this nationalisation comes at a time when the country is navigating political and economic transformations following multiple coups and growing tensions with former colonial power France. The country, alongside Mali and Niger, has increasingly aligned itself with Russia, further reflecting a shift in its international relations.

Endeavour Mining’s Position

Endeavour Mining, a major player in the West African gold mining sector, continues to operate mines across Burkina Faso, Ivory Coast, and Senegal. The company had rapidly expanded through a series of acquisitions, becoming one of London’s blue-chip stocks. However, it faced controversy earlier this year when former CEO Sébastien de Montessus was dismissed for “serious misconduct” related to financial irregularities.

As part of the resolution with Burkina Faso, Endeavour will receive $60 million in cash, with the first $15 million payment expected by the third quarter of 2024 and the remaining $30 million by the fourth quarter of 2024. The agreement also includes a 3% royalty on gold sales from Wahgnion, which analysts say could be worth around $20 million.

Despite the challenges, the settlement provides some relief for Endeavour, as it resolves the ongoing legal battle and removes uncertainty over the fate of the Boungou and Wahgnion mines.

A New Era for African Resource Sovereignty

Burkina Faso’s decision to nationalise these mines reflects a broader effort by African nations to regain control of their resources and ensure that the benefits of extraction are more equitably distributed. As more African governments assert their sovereignty over natural resources, the trend is likely to continue reshaping the continent’s economic landscape.

For Burkina Faso, this deal represents a step towards greater control of its mining sector at a time of political and economic uncertainty. The nation’s focus on retaining a larger share of its resource wealth, while navigating complex international relationships, illustrates the delicate balance many African countries are striving to achieve in the face of external pressures and internal demands.

As military regimes in countries like Burkina Faso, Mali, and Niger seek to reassert control over their economies and forge new alliances, the nationalisation of key industries like mining may become more common, reshaping the future of African resource management.