Shares in Canadian miner Kinross Gold’s (TSX:G) (NYSE:KGC) were plummeting Tuesday as unionized employees at the company’s Tasiast mine in Mauritania began a strike.
At lunchtime, the stock was down almost 9% to Cdn$5.92 in Toronto and was trading 7.6% lower to $4.52 in New York.
Among other issues, Mauritanian miners complain that there is a major gap between their salaries and expats working for Kinross.
“There are 2,600 Mauritanian workers employed by the firm of whom 1,041 are permanent, costing the company $36 million, while there are 130 expatriate employees who cost $43 million,” workers’ spokesman Bounenna Ould Sidi told AFP.
The Toronto-based gold producer said it remained open to re-commencing negotiations on a new collective agreement and to resolve other outstanding items with union representatives.
In March, Kinross announced it was going ahead with the first stage of a two-phase expansion designed to boost gold production and drive down costs at the problem-plagued project.
The resulting output from Tasiast, even after the expansion, will be considerably smaller than first envisioned back in the heady days of 2010, when commodity prices were booming and Kinross paid $7.1 billion for Red Back Mining Inc., owner of the mine.
Kinross Gold, the world’s fifth largest gold producer, said it did not expect strike to affect development of Tasiast phase one expansion.
The miner expanded its portfolio last year by acquiring two Nevada properties – the Bald Mountain mine and 50% of the Round Mountain mine – from Barrick Gold (TSX, NYSE:ABX).
It also recently raised $288 million through a public share offering and used the money to reduce debt.
However, Standard & Poor’s cut the company’s credit rating to junk in February amid a wave of mining downgrades.
Last year, the open pit operation produced 219,045 ounces of gold.