(Ecofin Agency) - During a ministerial council on April 19, Burkina Faso reviewed a bill amending its mining code. The bill introduces provisions allocating a portion of the resources intended for the Local Development Mining Fund to the Patriotic Support Fund. Pending its eventual adoption, mining law expert Charles Bourgeois discusses the legal issues associated with the bill in an interview with Ecofin Agency.

Ecofin Agency: How do you think mining companies will react to the adoption of this bill calling on the mining sector to support the Patriotic Support Fund and the fight against terrorism in Burkina Faso?

Charles Bourgeois: Badly. And they'll be right to complain because the mining industry is not required to be directly involved in a country's fight against terrorist groups. It already finances schools, health centers, and civil infrastructure such as roads and electrical grids. Mining investors can not assume the sovereign functions of a government, in Burkina Faso or any other country in the world!

Most international mining companies operating in Burkina follow strict environmental and social standards governing operations in conflict regions, the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, for instance. Financing the fight against terrorism through a contribution to the Local Development Mining Fund is going to give a strong headache to the  "ethics & compliance" managers of these companies and the banks and institutions that finance them.

Ecofin Agency: So, it is right to say that allocating part of the resources destined for the Local Development Mining Fund to the Patriotic Support Fund violates the international rules governing the activities of mining companies in conflict zones?

CB: Financing the Volunteers for the Defense of the Homeland (VDP)  from the Patriotic Support Fund will be a huge concern for mining companies and their financial partners if this bill is eventually adopted… 

Ecofin Agency: What are specifically the legal risks for international mining companies operating in Burkina Faso?

CB: They for instance risk being made complicit in war crimes, or even crimes against humanity... Recently, the United Nations High Commissioner for Human Rights requested an "impartial" investigation into the massacre of 28 people in Nouna, the capital of the Kossi province (north-west), which some media outlets claim was perpetrated by VDPs on the night of December 30 to 31, 2022. This demonstrates how hot the issue is in a context marked by inter-communal violence.  But that's not all.

What if rumors of the Wagner group's presence in the country prove to be true, and all or part of the sums collected by the Patriotic Support Fund are paid directly to Wagner to finance its assistance in the fight against terrorist groups?

In this case, the mining operators could be accused of financing an organization that is under US and European sanctions and considered a terrorist organization by certain countries. This is far from the local development aid initially planned in the 2015 Mining Code following the African Union’s recommendations.  

Mining operators and their financial partners based in Burkina Faso must realize the implications of the problem and immediately define a legal, if not judicial, strategy should this text be adopted by the Transitional Legislative Assembly. The response should be in line with their duty of due diligence in terms of conflict and human rights.

Given the growing importance of ESG criteria in the financing of the mining sector and the practice of "name & shame", which can be devastating for a company's valuation, the stakes are high for mining companies based in Burkina Faso. 

Ecofin Agency: Can mining operators refuse to pay that contribution to the Mining Fund for Local Development? What would you advise mining operators to do if the Transitional Legislative Assembly were to adopt this bill?

CB: It seems that several mining operators with a mining convention drawn up before the 2015 Mining Code came into force have opposed any contribution to the Local Development Mining Fund, citing the "fiscal stabilization" clauses in the said conventions.

Others “voluntarily” agreed to contribute to the Local Development Mining Fund provided the investments they make to benefit the population under their corporate and social responsibility are deducted from the amount to be contributed to the fund.  

Without going back over the legality of these objections, the latter have a ready-made argument for continuing to voluntarily finance their own CSR programs instead of contributing to the Local Development Mining Fund.  

For the others, i.e. the mining companies that obtained their operating permits after the adoption of the 2015 mining code, several actions could be envisaged in the event the bill is adopted. Perhaps, they can take the matter to competent courts to demand a preventive seizure of the sums contributed to the Local Development Mining Fund pending a court ruling on the legality of this reform.

Ecofin Agency: What legal action could be taken against mining operators contributing to the Patriotic Support Fund?

CB: It all depends on the jurisdictions involved. As far as French jurisdictions are concerned, the recent Lafarge case law in Syria shows that the French National Anti-Terrorist Prosecutor's Office could open an investigation into allegations of complicity and potential criminal liability of mining companies for war crimes and crimes against humanity under the French Penal Code.

The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) could also, for example, decide to launch an investigation if all or part of the sums collected by the Patriotic Support Fund are paid directly to the Wagner group.

In any case, Amnesty International's recent report on the responsibility of the regular army in the April 20 massacre of at least 147 people in the village of Karma in the north of the country shows that the situation is getting out of hand and that all mining operators and their financial partners will have to quickly define a strategy if the 2015 mining code reform bill is adopted.

Ecofin Agency: What would you say to someone who thinks that "financing the development of populations" can be linked to "the security of said populations"?

CB: It is up to the Burkinabe government and population to determine the legitimacy of such reform since they have the sovereign right to define the legal framework that enables them to finance anti-terror fights in their country.  

It is, however, important to remember, that the question of whether the Mining Development Fund should contribute to the fight against terrorism arises against a backdrop of falling gold production in the country, linked in particular to serious insecurity problems.

The drop in the State's mining revenues is forcing it to find alternative solutions to finance the country's security actions and the fight against terrorist groups, but it is not certain that development aid should be used to finance the armed struggle.

Ecofin Agency: The issue of security in Burkina Faso affects both the population and the mining companies. Numerous deadly attacks have been carried out recently against major gold mining sites such as the Karma, Boungou, and Essakane mines. If you feel that the State's modus operandi with this reform is neither good nor judicious, what do you think it can do, and how can companies help deal with the security issues?

CB: That's a difficult question, but you're quite right to ask. If the state cannot guarantee the security of mining sites against armed groups, it seems to me that the state has no choice but to recommend that operators temporarily close down the sites concerned.

The State must have a monopoly on the use of force, and the use of civilian militias, or even foreign mercenaries, to secure mining sites in fragile countries very often leads to cycles of violence that will not put an end to the country's security problems.

Mining companies have to be careful and make due diligence not to support any violence - however legitimate - in a country at war. In certain cases, they can invoke force majeure to suspend their operations, and must at all costs refrain from participating directly in the war effort to avoid being accused, rightly or wrongly, of exploiting "conflict minerals".

Interview by Louis-Nino Kansoun