SWAKOPMUND - Rio Tinto’s decision to sell its stake in Rössing to China National Uranium Corporation (CNUC) mitigates further job losses in the mining sector as the strategic mine was set to cease operations within the next seven years.
Rössing is the longest operating open pit mine in the world and has produced the most uranium of any single mine.
Rössing, which has been operational since 1976, was expected to cease operations by 2025 which would have seen massive layoffs as well the mine’s processing plant and infrastructure being demolished and the open pit mine remaining a mining void in the future.
But the transaction is subject to certain conditions, including the merger approval of which the final say rests with the Namibia Competition Commission (NCC). The transaction comes only two months after a similar deal between Rio and another Chinese firm, China National Nuclear Corporation (CNNC), did not materialise.
The managing director of Rössing, Richard Storrie, during a press briefing yesterday morning said that Rio Tinto’s decision to sell Rössing to CNUC for about N$1.5 billion was done after an extensive assessment of strategic options considered by Rio Tinto in terms of Rössing’s future.
“Rössing went through very rough years. Business was tough and financial losses were there. The current uranium stock price which is very low also subjected [us] to the difficulties we experienced for the past few years,” he said.
Storrie said that the sale which is expected to be finalised early 2019 also opens up the possibility of further exploration of mineral deposits by the new owners which in the long run will increase the lifespan of Rössing.
He added that there has been an overall understanding among employees that business was to close down in a few years’ time.
Thus the sale is rather positive, as it not only reaffirms long-term employment but also further exploration that further prolongs the lifespan of Rössing, he noted.
“The reality is the CNUC would look at Rössing in a different way. Rössing is anticipating to see a virtual integration into the uranium market in China as the country has been investing in nuclear reactors and with that the demand for uranium will increase,” he said.
He added that it will be business as usual at the mine with safety being key. “We do not want anyone to be distracted by the deal and are committed that employees leave the mine in the same condition they arrive.
“CNUC is twice the size of Rio Tinto and has 12 operations, five of which are outside, China including a minority investment in Namibia. This could potentially mean rehabilitation for the mine from its current state,” he said.
According to previous media reports, the mine was set to end its operations in 2025 as it was operating at a loss with no drilling initiatives and existing mineral resources that could expand its mining life beyond this period.
Storrie said that employment will remain as it is, as Rössing operates within the legal framework of Namibia.
Asked whether any Namibian company was interested in acquiring Rössing, Storrie said he was not aware of it, but confirmed that CNUC was the most suitable buyer to take over the company.
Rössing’s other shareholders are the Iranian Foreign Investment Company (15%), the Industrial Development Corporation of South Africa (10 percent) Namibian government (3 percent) and individual shareholders (3 percent).