Rössing Uranium Limited says outlook for the uranium sector still remains uncertain with miners continuing to contain costs as Chinese nuclear plans remain key to the possible recovery of the sector.
“While demand is expected to grow in the long term, the rate of growth remains uncertain due to its significant reliance on China’s nuclear build plans. In February 2019, China’s government gave preliminary approval for the construction of four new domestically designed reactors, ending a two-year long hiatus from approvals of new reactors,” Rössing Uranium Managing Director, Richard Storrie, said during the company’s presentation of its 2018 report to stakeholders. “In short, it is still a very challenging time for the uranium production industry as a whole and not just for Rössing Uranium. All producers will need to keep costs low in an overly-saturated market.”
The Rössing boss, however, noted despite the downturn in the sector, the company continued to benefit from its long-term contracts secure through its parent company, Rio Tinto. “Rössing Uranium supplies its material via Rio Tinto to electricity companies located in all four major markets namely North America, Europe/Middle East/Africa, Japan and Asia. Almost all of our production is marketed through long-term contracts with a diverse selection of customers worldwide,” he said.
In the period under review, uranium prices stood at US$28.82 per pound, up 21 per cent from the end of 2017, but then dropped to US$25.22/lb. The long-term indicator price rose to US$32 per pound, an increase of 3 per cent. “Global inventories remain at record high levels, around 950 million pounds or approximately five years of forward utility requirements,” he said. Storrie said the mine, one of the longest-operating uranium mines in the world, continued to be a leading uranium producer during the period under review.“In 2018 Rössing Uranium produced half of the 8.2 per cent uranium produced by Namibia as part the world’s primary production of uranium oxide. This is a significant achievement for both Rössing Uranium and Namibia,” he said.
“We increased uranium oxide production by 17 per cent - we produced 2,479 tonnes of uranium oxide compared with 2,110 tonnes in 2017 – this helped us to counter the effects of the lower price on our cash flow.”
Rössing revenue increased by five percent in the period under review, compared to the previous year, a factor the company attributed to a combination of higher sales price and a more favorable exchange rate. “The combination of these three achievements had a positive impact and resulted in a net profit after tax of N$166.5 million compared to the N$1.9 million profit the previous year,” the miner’s Managing Director said. He said the planned conclusion of the deal, where China National Uranium Corporation Limited (CNUC) acquired the shares of Rio Tinto in the business will go a long way in contributing towards its viability. “If we achieve our production and cost targets, and with the assistance from our prospective new majority shareholder, our business will remain feasible,” Storrie said.
He said despite the current financial strain under which operates, the company’s total expenditure for goods and services was N$2.49 billion during 2018. “We spent N$305 million of total procurement with international suppliers, representing 12 per cent of our procurement expenditure, while we spent N$250 million with South African suppliers, representing 10 per cent of our total expenditure. The bulk of what we spend in Namibia remains in the Erongo region at 44 per cent and Khomas region at 45 per cent of our total procurement spent,” the Rössing MD said.
Storrie added that previously disadvantaged Namibians had benefited through securing business from the company.“We remain committed to support Government development initiatives and policy frameworks. During the reporting period, we purchased N$100 million worth of goods and services from historically disadvantaged Namibians and local small- and medium-sized enterprises,” he said.
“I have highlighted a few of these value additions, reflecting the wealth created through the sale of our uranium oxide production, payments for services to suppliers, taxes to the Namibian Government, payments to employees and the investments made in the communities that are our neighbours.”
He said in 2019 the company will be targeting zero fatalities in its operations.
“Our aspirations for 2019 are a fatality-free Rössing Uranium mine with an engaged and empowered workforce. We will continue to improve our safety foundation, as our primary priorities remain to prevent harm to our people and the environment, whilst staying profitable,” the Rössing MD said.
Storrie informed that the company had invested millions through its corporate social responsibility initiatives. “One key investment in the neighbouring town of Arandis remained a focus area for our community activities, with a major partnership initiative between Rössing, the Rössing Foundation and the Arandis Town Council, was the implementation of the Arandis Roofing Project to the value of N$28 million over a three-year period. This is for the removing and replacing of the hazardous asbestos roofing sheets of 823 houses and two primary and secondary schools – we believe this asbestos roof replacing initiative at this scale, is a first for Namibia,” he said.