Moderate growth and subdued supply to gradually increase uranium prices
China National Nuclear Corporation (CNNC) Rössing Uranium has cautioned that while global uranium prices are expected to recover in the medium to long-term, the gradual recovery may take another five years. In its latest report to stakeholders, the uranium miner noted that moderate demand growth and subdued supply will drive a gradual price appreciation.
“The uranium spot market price in 2019 averaged US$25.91. While demand is expected to grow in the long-term, the rate of growth remains uncertain. 2019 witnessed a series of positive news events on nuclear development. China, for the first time since 2016, finally re-launched its approval for new projects and construction with at least four reactors having been approved – two at CNNC’s Zhangzhou site and two at CGN’s Huizhou site,” read a statement from Rössing Uranium Limited’s managing director, Johan Coetzee.
Of the 11% of the world’s uranium oxide produced by Namibia in 2019, Rössing Uranium produced 3.9%. This, Coetzee noted, is a significant achievement for both Rössing Uranium and Namibia as 75% of Rössing’s total production was delivered under long-term contracts and several historical spot contracts.
Rössing’s remaining production will be sold during 2020 to China, to be loaded into CNNC nuclear reactors. According to Coetzee, this vertical integration into the CNNC group opens a significant marketing opportunity into China for Rössing Uranium.
In 2019 Rössing Uranium produced a total of 2 449 tonnes of uranium oxide, which was marginally lower when compared with 2018’s production of 2 479 tonnes, whilst ending the year with healthy inventories on site.
Rössing’s 2019 revenue was in line with 2018 at N$2.82 billion as lower sales volumes were largely offset by a more favourable exchange rate. However, Coetzee stated that a 15% reduction in operating costs had a positive impact on profits before tax as the reduced costs largely contributed to an improved net profit after tax from normal operations of N$503 million (2018: N$166 million).
In 2019, the mine’s total expenditure for goods and services to maintain safe operations amounted to N$2.72 billion (2018: N$2.49 billion), of which 75%, (N$2.03 billion) was spent with Namibian registered suppliers. The bulk of the Namibian spend was in the Erongo region (43%) and Khomas region (44%).
Total procurement from international suppliers amounted to N$373 million, representing 14% of total procurement expenditure, excluding South Africa, where goods and services to the value of N$311 million (11%) of total procurement were spent.
Rössing invested N$26 million in Namibian communities during 2019, directly and through the Rössing Foundation. This is a 100% increase compared with the previous year.
“2020 and the next few years will still be challenging, but with our new majority shareholder we are confident that we will build from a solid base, exploring various opportunities to remain a competitive supplier of uranium into the nuclear energy market,” Coetzee stated in the stakeholder report. CNNC concluded the purchase of Rio Tinto’s 68.62% shareholding in Rössing Uranium on 25 July 2019 with no change in the other minority shareholders.
2020-07-28 10:14:38 | 2 months ago