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Kinross to invest $300m in Mauritania’s Tasiast gold mine

By Alain Faujas
Posted on Tuesday, 18 June 2019 14:03, updated on Monday, 24 June 2019 16:49

M‘Barick, vice-president of external relations at Tasiast Mauritania Limited SA (Photo: Giulio Napolitano/FAO)

In Mauritania, Canadian mining giant Kinross is asserting its ambitions for the development of its world-class gold deposit, despite disagreements with Nouakchott.

Since Kinross bought the Tasiast gold mine – one of the largest in Africa – in 2010, it has been losing money there. The mining giant has not been discouraged: Brahim M’Bareck, vice-president of external relations of Tasiast Mauritania Limited S.A. (TMLSA) has announced a $300m fundraising round. This is proof of the company’s desire to remain in Mauritania for the long term, even if Nouakchott is currently refusing to grant a concession for the extension of its mining permit.

Tasiast produced 7tn of gold in 2018. Why it is experiencing recurrent losses?

Brahim M’Bareck: Not only does a mine call for huge investments that take a long time to be profitable, but the Tasiast mine required the construction of very heavy infrastructure and a mining city in the middle of the desert. The first years were therefore devoted to earthworks and preparating for operations. In addition, fluctuations in gold prices have not helped. Tasiast now has one of the biggest gold mills in Africa and a crusher with a large capacity.

A target of 20,000tn is within our reach

These investments enabled us to process 15,000tn of ore per day at the end of the Phase 1 expansion in the last quarter of 2018. A target of 20,000tn is within our reach.

Why is Tasiast’s productivity lower than that of other Kinross mines?

We needed a significant ‘discovery’ at the top layer of the deposit. But in the first quarter of 2019 we achieved record production, a sharp increase in gold content and historically low costs. We are getting closer to the productivity of our other mines.

How did you avoid the strike that was announced in April?

TMLSA wants to maintain a calm atmosphere with its staff representatives. Its workforce is 95.5% Mauritanian, and $320m in gross salaries were paid between 2011 and 2017. Discussions were already under way to renew the company’s labour agreement, which expires on 2 October 2019.

In view of the quality of these discussions, management decided to make a move: a bonus was paid for the first quarter of 2019 as well as an Eid bonus, despite the fact that TMLSA did not make a profit in 2018. The strike notice has been lifted. To improve productivity through a stronger culture of efficiency, TMLSA wants the future agreement to link bonuses to production but not to results. I hope that an agreement will be reached on this.

In this difficult context, what does Mauritania represent for Kinross today?

Relations between Kinross and Mauritania have developed within the framework of a demanding agreement. For Kinross, this means extracting at least 5m ounces by 2029. Mauritania benefited from $1.6bn paid to subcontractors from 2011 to 2017 and from $580m in royalties, taxes and duties, which contributed 5.5% to state revenue.

In the Tasiast area, unemployment has fallen by a quarter

That is in addition to the wage bill I have already mentioned. In the Tasiast area, unemployment has fallen by a quarter. As the largest private investor in Mauritania, Kinross intends to continue this win-win relationship, and I am delighted that this will soon be reflected in a $300m investment with the support of Export Development Canada, two commercial banks and the International Finance Corporation, the private-sector arm of the World Bank group.

When will the Mauritanian government give the green light to the extension of the mine and its Phase 2?

In reality it was TMLSA that put its Phase 2 expansion plans on hold because of a changing context. First, Kinross first intends to optimise the existing operations. We are studying how to further reduce the mine’s costs by turning to cogeneration in terms of energy. Within the framework of the current mining agreement we need to explore the possibility with the government of an exemption for fuel oil used by TMLSA, as well as the transformation of the exploration agreement into an operating agreement.

Kinross paid $950,000 to the US ‘stock exchange policeman’, the Securities and Exchange Commission (SEC), to settle an action involving alleged corruption in Africa. What is the situation in Mauritania?

No cases of corruption of public officials have been reported. The internal investigation conducted after the SEC’s warning resulted in some individuals being relieved of their responsibilities. The problem with the SEC is sorted and Kinross has taken the opportunity to improve the transparency and oversight of its operations.

This article first appeared in Jeune Afrique.

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