Kinross Gold struggling to reverse losses at Mauritania’s Tasiast mine – by Geoffrey York (Globe and Mail – September 21, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

NOUAKCHOTT, MAURITANIA — When the executives of Kinross Gold Corp. fly in from their Canary Islands office to the dusty capital of the desert country where their flagship African gold mine is located, they can’t avoid seeing the hulking symbol of mining failure that dominates the skyline: the empty shell of a 15-storey skyscraper that the state mining company had started building.

Mauritania’s state-owned iron-ore company, SNIM, was due to finish the tower months ago. Instead it sits half-built and abandoned, flanked by a pair of idle construction cranes. There are no signs of life. The foreign construction contractors are long gone, leaving behind piles of sand and cement blocks.

Plagued by strikes and weak iron-ore prices, SNIM is in deep trouble, while most of Mauritania’s other resource projects are winding down or shelved. The national economic slump has compounded the pressure on Kinross as it struggles to reverse the losses at its huge Tasiast gold mine on the edge of the Sahara in northwestern Mauritania.

“Other than SNIM, we’re the last guys standing,” says Mike Sylvestre, a former Inco executive from Sudbury who heads the Kinross regional office in West Africa.

“There really isn’t anything else going on right now in mining or oil and gas. So we’re trying to keep the mine viable and make it profitable. We believe Tasiast is a rare asset. We truly believe in its future.”

The Toronto-based miner acquired Tasiast in 2010 as part of its $7.1-billion (U.S.) takeover of Red Back Mining Inc. – a deal that soon proved disastrous. As gold prices fell and costs remained high, Kinross had to write down most of its Tasiast asset. Last year, the mine lost $65-million and its losses are likely to be even higher this year, Mr. Sylvestre says.

This year Kinross suspended a planned $1.6-billion expansion that would have allowed the mine to process 38,000 tonnes of ore a day, compared with 7,000 tonnes now. Mr. Sylvestre still believes the mine can return to profitability by the end of 2017 – but only if it goes ahead with cost-cutting measures that have sparked widespread outrage in desperately poor Mauritania.

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