2018-04-27Staff Report 2 Eveline de Klerk Walvis Bay - About 600 workers at the troubled Langer Heinrich mine fear losing their jobs after the company confirmed yesterday that it was shutting down its mining operations at the open pit mine in the Namib Desert. Paladin Energy, the owners of the mine, told its employees that it would be placing the mine under care and maintenance, latest August this year. The plummeting uranium prices, which are the lowest in 15 years, are the contributing reasons. The mine’s interim managing director Michael Itrona broke the sad news to the employees yesterday morning with an internal memo. “There will be retrenchments for a large number of employees as only a small multi-functional staff pool of about 20 people will stay on. Care and maintenance will take a while to be fully implemented and retrenchment arrangements will be discussed with employees,” the memo told the employees. “Care and maintenance is the only real responsible alternative,” Itrona explained in the memo. At its peak Langer Heinrich represented one of the largest uranium reserves in Namibia having estimated reserves of 57,000 tonnes of ore grading 0.055 percent uranium. Paladin Energy CEO Alex Molyneux yesterday issued a statement to shareholders and the media saying the reasons to shut down the mine include the continued deterioration of macro factors, the stubbornly low spot uranium prices, and foreign exchange rates. Put together all those factors made it “less likely that the company will be in a position to resume physical mining activity at Langer Heinrich nor would processing low grade stockpile be viable”, Molyneux said. The mine has commenced consultations with the minister of mines and energy and the Mineworkers Union of Namibia to finalise the process. Molyneux also said preparations are underway to make “arrangements and changes in staffing that may result in initial redundancies”. Australia’s Paladin Energy had sold a 25 percent ownership stake in the mine to the Chinese Uranium Corporation Ltd, a wholly owned subsidiary of Chinese National Nuclear Corporation (CNNC) for U$190 million (about N$2 billion). However, the once dubbed mining hero, Paladin, had just completed a restructuring after entering into administration in July 2017. The company is being propped up by the Deutsche Bank loan which was given to refinance secured debt with Nedbank, and to keep Langer Heinrich mine operational, as well as provide additional working capital across the group. The stoppage of the mining activities at Langer Heinrich is another blow to Paladin Energy. Molyneux emphasised that the plummeting uranium prices are to blame, saying the spot price has been hovering at about N$248 (US$20) per pound, compared with the peak spot price of N$1,736 (US$140) per pound when Langer Heinrich went into production in 2007 and the N$868 (US$70) per pound price of uranium before the Fukushima disaster in March 2011. “The uranium market has failed to recover since the Fukushima incident, with the average spot price so far in 2018 the lowest in 15 years,” he said. “It is deeply distressing to have to consider suspending operations at Langer Heinrich because of the consequences for our employees and the broader community. However, as there has yet to be a sustainable recovery in the uranium market, and with the aim of preserving maximum long-term value for all stakeholders, it is clearly prudent to consider these difficult actions,” Molyneux added. Paladin would make a formal decision on the future of the Langer Heinrich operation within the next two months, with the care-and-maintenance process expected to take between one and two months, after which the mine would cease uranium production. Paladin previously told shareholders that the medium-grade ore stockpiles currently being used as feed for the Langer Heinrich processing plant would be exhausted before mid-2019, necessitating a decision on the future of the project. Paladin produced 670,456 pounds of uranium oxide from its Langer Heinrich operation during the three months to March, a 23 percent decline on the previous quarter. The project has a 5.2-million-pound-a-year nominal production capacity, and in 2017 produced 3.4-million pounds of uranium oxide. Physical mining at the project was halted in 2017. 2018-04-27Staff Report 2
