‘Guns, Hostages, Arrests’ don’t happen with domestic U.S. mines

Global mining is becoming more dangerous every day. According to an excellent report in The Wall Street Journal, global mining is facing a rash of “increasingly aggressive actions” toward Western investment, with governments trying to “wrest more control” of mining projects.

The Journal reports on the case of a lithium mine in southern Ethiopia:

Neil Warburton was finishing up his breakfast of porridge and local honey when the armed soldiers converged…

At about 7:30 a.m. on Oct. 16, 2023, Warburton was dining with the mine site manager and geologists when an army colonel arrived and ordered all expats off the site, citing a security issue.

Warburton spied machine guns cradled in soldiers’ arms and mounted on white pickup trucks. Dozens of soldiers flanked the dozen or so expats, then drove them away from the mine to a nearby town. 

“It was scary,” said Warburton, executive chairman of an Abyssinian Group company. “They were army soldiers with automatic weapons. And if they say move, you move.”

A unit of the Abyssinian Group had been exploring the area since 2021 in a joint venture with a state government-backed mining company. Under the terms of the agreement, the Abyssinian Group would bear the costs of the exploration and get 51% of the project’s profits, with the rest going to its local partner. 

But now the government was asking for cash outside the bounds of the agreement.

Abyssinian offered to pay tens of millions of dollars to resolve the spat if the government satisfied certain conditions, but its exploration license was revoked in August. In October, its country director, Ali Hussein Mohammed, was summoned by the government to Addis Ababa, Ethiopia’s capital, ostensibly to continue the discussions. Instead, he was taken to a detention center, where he remains. 

A few choice phrases come to mind to describe this type of behavior: shifting goalposts, strong-arming, shaking-down, and hostage-taking.

The Journal’s reporting continues:

Investors worry about pouring big sums of cash into mines that can cost billions of dollars to build, only for governments to later shift the goal posts, said John Ciampaglia, senior managing partner of precious metals and critical materials-focused Sprott. Toronto-based Sprott manages roughly $33 billion in assets. 

It is common for governments to try to wring more from miners when commodity prices rocket and fatten company profits. And it is now generally understood that a larger percentage of benefits should flow to local communities, many in countries that were previously exploited for their raw materials.

These days, many governments are strapped for cash after borrowing surged during the pandemic, and are looking for ways to replenish their coffers…

The tactics being used are different than in the past and are “borderline criminal at this stage,” said Damien Nyer, an international disputes partner at law firm White & Case. “People getting arrested and held as hostages, as bargaining chips—it’s something I haven’t seen in my career.” 

The report continues with examples from Mali, which “briefly detained” four employees of Canada’s Barrick Gold in 2024 and released them only after the company agreed to pay $85 million to “resolve outstanding disputes.” An Australian mining company, Resolute Mining, paid $160 million after Mali authorities “detained the company’s chief executive and two other employees for nearly two weeks.”

In what world is it preferable for mining companies to endure ‘guns, hostages,’ and ‘arrests’ rather than procuring domestic minerals in the U.S.? With copper, nickel, and other critical minerals mined in Minnesota, manufacturers know that the mines live up to stringent environmental and worker health and safety standards — and the developers aren’t being strong-armed and taken hostage.