Despite injecting major time and effort into reducing its unit costs to conserve cash at its Moma minerals sands project in Mozambique, and achieving some success, LSE/ISE-listed minerals sands miner Kenmare Resource has declared its actions to date insufficient.
According to the company, it needs to cut costs in order to compensate for a decline in titanium minerals and zircon prices.
An announcement issued by the company earlier says: “Unit cash operating costs per ton of product produced declined by 14% for H1, 2014 relative to H1, 2013. However, these and subsequent savings have been insufficient to offset the decline in prices experienced by the company.”
Fortunately, a thorough review of operations and staffing has enabled the company to identify additional areas where further efficiencies can be achieved. This unfortunately will result in a reduction in Moma employees.
The announcement further indicates: “Kenmare has already been engaged with employee representatives to explore alternatives including amendments to pay scales and voluntary redundancies. However, it is now expected that compulsory redundancies will be necessary and is expected to result in a reduction of 15 – 20% of the mine’s workforce. Kenmare continues to engage with the Government of Mozamibique and workers’ unions on this matter.”
On a positive note, the company does note that grid power (one of its biggest operational challenges on site) has been restored to the mine following recent flooding in northern Mozambique. Mining and HMC production have subsequently resumed.