Ever wanted to own shares in a tanking tungsten mine? Well, now you do.
The Government has converted a $10 million debt owed to Tasmanians into a reported 12 per cent share of King Island’s Dolphin Tungsten Mine (ASX: G6M).
The mine has reportedly in four years racked up more than $81 million in debt and desperately offered creditors a debt-to-equity swap, confirmed by shareholders on April 23.
But you’d think after farewelling our $10m into shares – now $7m after a 30 per cent fall on the price – that would be the end of Tasmanian’s exposure to this business.
But this week we learn the government has loaned G6M $7.5 million on the quiet – with none of the media releases that went with all other announcements about government investment in the mine.
The loan was approved by Tasmanian Development Board.
The Government, in just another dud deal (think AFL stadium et al.) has almost certainly done our dough in one of their many corporate welfare handouts.
This purchase has not received the scrutiny it deserves. And begs the broader question – why do governments give public money to private businesses? When is it justified; when is it not?
Resources Minister Mr Abetz said in a summer break media release: “To give the mine the best chance of success, the Government is converting its existing $10 million loan into an equity stake in Group 6 Metals, as part of a broader turnaround plan developed by the company and its senior lenders.”
The scheelite mine produces tungsten; a critical metal used in everything from high-tech manufacturing to defence applications and reopened in 2023 after sitting idle for 30 years.