Selling Rössing to the Chinese may keep mine open beyond 2025
Rössing Uranium Ltd will start with a detailed pre-feasibility this year in anticipation of the mine’s end-of-life which is planned for 2025. However, a sales process, currently underway, may throw this mine a lifeline taking its productive life beyond the looming deadline.
Launching the mine’s annual stakeholder report this week, Rössing Uranium’s new Managing Director, Richard Storrie, discussed their highlights in a slide presentation distilled from the 76-page report.
Shutting down the Rössing mine will be an expensive exercise. At this point it is estimated that the closure will cost around N$1.56 billion and that it will take several years. To this figure must still be added the staff retrenchment costs. Providing for this expense required the mine to establish a separate fund which stood at N$845 million at the end of December 2018.
“The mine will make additional payments to the fund each year to provide for the eventual total cost of closure by 2025,” Rössing states.
Storrie pointed out that most of 2018’s achievement did not happen on his watch but on his predecessor’s, Werner Duvenhage. Storrie only started at Rössing in October last year.
Regarding the possibility of Rio Tinto’s shareholding in Rössing being taken over by a new owner, Storrie said a binding agreement has been reached in November last year with China National Uranium Corporation Ltd, who will then become the control shareholder. This deal is punted as pivotal for the future existence of the mine but it is still subject to approval by the Namibian Competition Commission. Rio Tinto expects the transaction to be finalised in this semester still.
“I want to assure you that the announcement of the sales transaction of the majority shareholding is seen as very positive, giving certainty to the survival of the operation at least until 2025 and potentially extending the mine life beyond that,” Storrie said.
Despite the continuation of ultra-low uranium prices and a worldwide surplus inventory nearing one million tonnes, certain developments in US trade policy and the closure of a Canadian producer, has rekindled some investor interest which led to a slight improvement in the uranium price.
The price improvement in 2018, together with mining a higher grade ore, enabled Rössing to increase their uranium oxide production by 17% albeit on smaller mining volumes.
The mine produced 2,479 tonnes of uranium oxide in 2018, up from 2017’s 2,110 tonnes. This makes Rössing Namibia’s second largest uranium mine after Husab, but only by a whisker. In 2018 Namibia produced 8.2% of the world’s uranium, nearly half of which came from Rössing.
Tied to some cost-saving strategies totalling N$310 million, Rössing posted a very respectable N$166.5 million profit after the calamitous 2017 when the profit failed to reach N$2 million.
The Rössing mine is a major local economic player. It procures nearly 80% of its supplies from Namibian vendors and it plays a significant role in small business support, education and community development.
Although the mine’s accumulated losses relieved it of paying any tax on profit in 2018, it still contributed N$551 million to the fiscus and parastatals.
Personnel safety, one of the mine’s core operational concerns, is paramount in every aspect of mining activity. In 2018, the mine reached 450 injury-free days.
The full stakeholder report can be accessed at www.rossing.com under ‘Reports & Research’.