The Namibian (Windhoek)

Namibia: Rössing Supports Local Despite Tough Year

Rio Tinto's Rössing Uranium Mine last year spent the biggest chunk of its procurement budget in Namibia, paying out about N$1,64 billion to local service providers, the company's latest stakeholders' report has shown.

About 63 per cent of the mine's total procurement budget for 2011 was spent in the country. Of the 63 per cent, about N$900 million (55 per cent) was spent in the Erongo Region. And of this amount, nearly N$694 million (77 per cent) was spent in Swakopmund.

Since 2007, Rössing has spent N$7,2 billion with Namibia service providers. The mine paid N$736,3 million in salaries to its 1 637 employees last year, of which N$178,7 million flowed into state coffers as income tax. In addition, it paid Government N$196 million in royalties.

Rössing's company tax of N$294,6 million for the year was deferred, as the mine suffered a net loss of N$471 million. The mine also didn't pay a dividend to Government in 2011. However, it did pump N$236,3 million into state-owned enterprises (SOEs) like NamWater, NamPower, TransNamib and NamPort during the year.

Rössing's managing director Chris Salisbury said in the report that 2011 was a difficult year for the mine, as it missed its production target resulting in the significant loss. The mine's loss grew by nearly a thousand per cent for its net loss of N$43 million in 2010. In 2009, it made a net profit of N$290 million.

"While we planned for a loss due to our expansion programme, it was much more severe than expected," he said. Rössing production for 2011 reached 2,2 tonnes of uranium oxide, 31 per cent below target and a drop of 41 per cent from the 2010 production figures.

"We had serious challenges in every section of the production value chain - from mining to metal drummed.

"The challenges included above-average seasonal rainfall at the beginning of the year; the closure of the open pit's Trolley 10; lower ore grades; low crushing plant availability; the planned two-week maintenance shut-down; and industrial action during the second half of the year."

The Rössing report stated that while the industrial action "severely impacted on our production, it has many positive spin-offs".

"To settle the dispute, the company and the Mineworkers Union of Namibia (MUN) signed a memorandum of understanding which aimed at starting a new relationship. The agreement dealt with the central issues in dispute as well as other matters that would benefit both parties," the report stated.

Rössing has invested N$1,7 billion in capital expenditure over the past five years as part of its expansion programme.

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