SWAKOPMUND – Rio Tinto has completed the sale of its entire 69 percent interest in the Arandis-based Rössing Uranium Mine to China National Uranium Corporation Limited (CNUC).
The sale consists of an initial cash payment of US$6.5 million (around N$90.3 million) plus a contingent payment of US$100 million (N$1 390 000 000), according to a media release issued by Rio Tinto yesterday.
The US$100 million 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.
Rio Tinto Chief Executive Officer Jean-Sébastien Jacques said the sale demonstrates the company’s commitment to further simplifying and strengthening its portfolio, bringing the total divestment proceeds received since 2017 to US$11.2 billion (N$155 680 000 000), of which US$9.7 billion has been returned to its shareholders.
“I would like to recognise the hard work of people across Rio Tinto and the communities around Rössing who have contributed to the success of the mine and wish them all the best for the future under new ownership,” Jacques said.
Last month, the Namibian Competition Commission approved the acquisition of Rössing Uranium Limited by CNUC, with conditions.
The commission also found that the proposed transaction is unlikely to result in the prevention or substantial lessening of competition or in any underrating acquiring or strengthening a dominant position in the relevant market.
In May, Rio Tinto said it will accelerate the closure of the Rössing Uranium mine to June 2020 if the N$1.5 billion sale of the mine to China National Uranium Corporation (CNUC) was not approved by the Namibia Competition Commission (NaCC).
The mine has about 1000 employees and a lifespan stretching to 2025.
The Namibian government holds a three percent stake in Rössing but possesses the majority (51 percent) of voting rights. The Iranian Foreign Investment Company holds a 15 percent stake in Rössing.
The Industrial Development Corporation of South Africa owns 10 percent in the mine, while local individual shareholders own a combined three percent.
Werner Duvenhage, the Managing Director of Richards Bay Minerals, who spoke on behalf of Rio Tinto in May this year, said Rio Tinto cannot continue sustaining a loss-making business hence the decision to wrap up operations early if the sale was rejected.
“Thus we want a decision to be made as soon as possible so that everyone affected and involved in this transaction can plan ahead for their own future.”
Management explained at the time that there was no second buyer that could be considered if the proposition by the Chinese buyer was not approved.
“There is no second option as all of the potential buyers did not meet the criteria for the sale. We have been looking for an investor for the past five years that will continue operations as Rio Tinto had been doing. CNUC are our best option as they qualified in terms of the criteria used to identify a suitable buyer,” he said.
While Rössing made a profit of N$160 million in the previous financial year, it had a negative cash flow for years and spends more than what it makes. - Nampa (Additional reporting by New Era)
2019-07-17 09:51:11 | 4 months ago