Kinross Gold Corporation (USA)(NYSE:KGC) is having a tough time to sustain the operations at Mauritania’s Tasiast mine. Other than Kinross, the state-owned iron-ore firm, SNIM is standing in the region. Plagued by weak iron-ore prices and strikes and, SNIM is in trouble, while a big part of other resource projects in region have shelved or winding down. The national economic slump has increased the pressure on Kinross Gold as it struggles to recoup the losses at its Tasiast gold mine located in northwestern Mauritania.
The management view
Mike Sylvestre, the Head of regional office in West Africa, said that there really is not anything noteworthy going on in mining or oil and gas industry. Therefore, Kinross is trying to keep the mine workable and turn it profitable. The management believes Tasiast as a rare asset and truly believes in mine future.
Kinross bought Tasiast in 2010 as a part of its takeover of Red Back Mining Inc. in a deal valued at $7.1-billion. However, the deal proved disastrous as gold prices declined with no reduction in costs. As a result, the company was forced to write down a big part of its Tasiast asset. In 2014, the mine booked losses of $65-million and in fact the figure is going to be higher this year.
Earlier in 2015, Kinross Gold Corporation (USA)(NYSE:KGC) suspended a $1.6-billion expansion plan that would have enabled the mine to process as much as 38,000 tonnes of ore per day against 7,000 tonnes now. Sylvestre still considers that the mine can become profitable by the end of 2017 only if it follows cost-cutting plans that have resulted in widespread outrage in poor Mauritania.
Last week, Kinross reported over 225 voluntary severances and layoffs at the mine. The Union leaders are threatening strikes or protests if company denies stopping the reduction to its work force of nearly 2,200 employees and contractors.