WINDHOEK – Epangelo Mining, the State-owned mining company established in 2008 to occupy a significant position in major commodity businesses, inclusive of uranium, has confirmed that while it was not offered a first-right of refusal for the Rio Tinto shares in Rössing Uranium, because it is not a direct shareholder in the mine, it is in fact interested in increasing government’s three percent stake in Rössing Uranium. CEO of Epangelo Mining, Eliphas Hawala, yesterday explained to New Era that only the government is entitled to receive a first right to refusal offer because government is a direct shareholder in the mine.
“Epangelo made a bid in 2017 to buy the 10 percent stake owned by IDC in Rössing. Epangelo did not get approval from the Cabinet Committee on Economic/Financial Affairs to pursue this deal,” said Hawala in response to questions by New Era.
Hawala admitted however that while Epangelo does not have financial resources to buy all or some of the Rio Tinto shares in Rössing Uranium it is capable of mobilising such resources, should an opportunity arise and should the project be profitable.
“Given the current prices, only Chinese entities can afford to buy loss-making uranium assets, assuming that such Chinese entities plan to recover their losses; by producing nuclear energy in China,” Hawala stated.
He added that the impact to the local mining industry is positive but noted that the impact to the tax regime may be negative in the long run.
“A loss-making entity does not pay tax. This potential risk can be mitigated by putting appropriate government interventions and measures in place, e.g. by requiring that some form of beneficial Namibian participation should be made conditional to approval of this deal, including conditions for some form of ‘trickle dividend’ be paid to the participating competent Namibian entity. The power for such intervention lies with the Competition Commission and with the Ministry of Mines and Energy. Epangelo is ready to participate in such a deal, provided that such participation will have no recourse to the state and that such participation involves the envisaged trickle dividend formula,” Hawala stated.
Global mining company and majority shareholder in Rössing Uranium, Rio Tinto, on Monday announced it has entered into a binding agreement with China National Uranium Corporation Limited (CNUC) for the sale of its entire 68.62 percent stake in Rössing Uranium Limited, owners of the Rössing mine for up to US$106.5 million (about N$1.5 billion at today’s exchange rate).
The total consideration comprises an initial cash payment of US$6.5 million, payable at completion, and a contingent payment of up to US$100 million following completion. The contingent payment is linked to uranium spot prices and Rössing’s net income during the next seven calendar years. In addition, Rio Tinto will receive a cash payment if CNUC sells the Zelda 20 Mineral Deposit during a restricted period following completion. The total consideration is subject to a maximum cap of US$106.5 million.