Merry Rössing re-aligns for profit in 2014
After suffering a loss of N$471 million last year, Rössing Uranium has implemented strategic changes to ensure it reaches profitability by 2014. The uranium miner’s new approach takes into account local operating conditions as well as the expected future trajectory of the uranium price.
Jerome Mutumba, the manager of external affairs at Rössing Uranium said that although there have been recent reports speculating that the loss was attributed to fraud, this was not true.
“Our poor production performance impacted on our financial performance. Moving from a profit of N$1.23 billion in 2008 and N$290 million in 2009, we recorded a loss in the past two years”
“In 2010, our loss amounted to N$43 million, but increased to N$ 471 million in 2011. While we planned for a loss due to our expansion programme, it was much more than expected.”
In his recent presentation to the media, Mutumba said that financial performance was impacted by the lower uranium price but that additional pressure on profitability came from higher input prices, higher operating costs, exchange rate fluctuations, lower levels of production, severe weather conditions as well as industrial action.
With the company halfway through its Life-of-Mine extension pre-strip programme in the open pit, Mutumba said at completion, it will allow them to access higher-grade ore and to improve production output by 2014. In the meantime, the Rio Tinto miner remains focused both on expanding operations and on extending the mine’s life beyond 2023.
He said that their key priority in 2012 will be the completion of the prefeasibility study for heap leaching which is their preferred process for higher output.
In a recent interview, Mutumba told the Economist that the heap leaching prefeasibility study on the original scope has already been completed but they will still continue with the test work as well as with the operation of the demo plant to optimise performance.
“Heap leaching has been identified as the lowest cost expansion option available to Rössing as the most simplified process applicable to our ore. A heap leach process as an addition to the existing tank leach process would increase production and reduce Rössing’s overall unit operating cost thus improving profitability.
“Another benefit would be the flexibility of having a second process to treat certain material that is difficult to treat with the tank leach.”
He said that over the next three years, they will concentrate on removing the higher benches from the extension areas of the open pit to get to an improved ore grade progressively.
“Uranium production will steadily improve as higher-grade ore is accessed from the new mining area in the current open pit.” He said that this will be combined with their focus on improving operational efficiency in order to bring down unit cost and improve their profitability.
“We invested heavily in time and resources to improve our efficiency, productivity and cost base to become a top performing uranium producer and to earn the right to secure financial support to execute our growth plans.” Mutumba concluded by saying that although Rössing faces a tough few years ahead, they firmly believe that the Rössing team is more than capable of working through the challenges and setting the business up for growth and an even longer mine life.