Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gold producer Metallon Corp. halted output at three of its four mines in Zimbabwe because of mounting debts, as a South African newspaper reported the owner is considering selling the operations.
The suspension is the latest sign of stress in the southern African nation’s gold industry, which has been hampered by a shortage of foreign exchange. Zimbabwean laws force producers to sell their metal to the central bank, which only allows companies to retain a portion of their export proceeds.
Metallon suspended operations after a group of workers applied to have business-rescue measures implemented at two of its mines, the company said Sunday in an emailed response to questions. The workers, through their lawyers, said they’re owed more than two years’ wages and benefits by Metallon, it said.
“The company has since placed three of its mines — Mazowe, Shamva and Redwing — under care and maintenance as debts mount,” it said.
Metallon owner Mzi Khumalo is considering selling the company’s gold mines, which have accumulated about $200 million of debt, the Johannesburg-based Sunday Times newspaper reported, citing people it didn’t identify. Canadian miner B2Gold Corp. may be interested in buying the mines, it said.
Metallon declined to comment on the report. B2Gold didn’t respond to an emailed request for comment sent outside normal business hours.
In addition to the three mines that have been shuttered, Metallon also operates the How Mine in Zimbabwe.
(Reporting by Godfrey Marawanyika).
