Attack in Burkina Faso threatens gold’s final frontier

NAIROBI/JOHANNESBURG/ LONDON — As jihadists wreaked ever more havoc in the last two years, mining firms in Burkina Faso rolled out extra security measures, from barracks for government troops protecting them to safe rooms for workers behind barbed wire and mounds.

Expatriates generally fly in and out, while local staff still drive but in guarded convoys.

That has added millions of dollars to security costs for foreign companies, mainly from Canada and Australia, operating in the West African nation where industrial miners are forecast to produce 60 tonnes of gold this year.

Yet this week’s attack on a convoy ferrying hundreds of local employees and contractors from a mine owned by Canada’s Semafo has exposed how vulnerable firms still are.

At least 37 civilians died, with another 60 injured and dozens more feared missing.

“This is the deadliest incident targeting the mining industry, or any private businesses, in the Sahel since the 2013 In Amenas hostage crisis,” said Vincent Rouget, an analyst at Control Risks Group, referring to an attack on a gas plant in the Algerian desert that killed dozens of foreign hostages.

There has been no claim for Wednesday’s ambush, but the modus operandi – a bomb attack on military escorts followed by gunmen unleashing bullets – suggested the involvement of Islamist groups.

They have been pushing south from strongholds in northern Mali to carry out attacks across much of Burkina Faso and parts of western Niger.

Over 1,000 people have been killed in Burkina Faso since 2016 and nearly 500,000 more have fled their homes, mainly this year. In this time, there have been dozens of attacks on industrial and small-scale mining operations.

After Wednesday’s attack Semafo said its Boungou mine site remained secured, but it suspended operations there.

It is a dilemma for miners. The region is seen as the gold industry’s final frontier, with large untapped reserves.

Lured by relatively low-cost mining, Semafo and others like Barrick, IAMGOLD, Endeavour Mining, and Resolute Mining, have invested billions there over the last decade - but expansion by al Qaeda and Islamic State-linked militants could force them to rethink.

“Because of the escalating security situation in Burkina, there are companies looking at decreasing their exposure to the country or leaving,” said Bill Witham, the head of AAMEG, a body representing Australian resource companies in Africa.

“But the miners still see West Africa as a whole as quite a good investment.”

Semafo’s Toronto-listed shares have fallen 17 percent since the attack. And major mines just over the borders in northern Ghana and Ivory Coast are now within striking distance of Islamist strongholds, experts warn.

Last year, AQIM, the main al Qaeda affiliate in West Africa, told followers Western companies, especially from France, were “legitimate targets”.

Semafo, whose staff, contractors or escorts have been attacked three time in the last 18 months, declined to comment further, saying only that it had beefed up security since those episodes.

Eight other companies contacted by Reuters around the Sahel would not give details of their extra security costs.

West Africa has long been considered a risky prospect where political instability, volatile tax regimes and tricky relations with small-scale miners weigh heavily on boardrooms.