Namibia: Rio Tinto Finally Sells Rössing

RÖSSING Uranium has finally been sold to Chinese state-owned China National Uranium Corporation Limited (CNUC), the company announced yesterday.

Rio Tinto, who have been the majority owners of the mine since before independence, sold their 69% stake for about N$1,5 billion to CNUC, made up of a cash payment of N$90 million and a contingent payment of up to N$1,4 billion.

"We have the money, and as of today, it is operated by CNUC," David Outhwaite, Rio Tinto's international media spokesperson, told The Namibian yesterday. "So, any questions about the mine's future plans should be directed to them."

The acquisition brings Chinese government-linked companies owning and controlling Namibia's biggest uranium mines to two after Husab Uranium, which is 90% owned by China General Nuclear Limited.

In a statement issued yesterday, Rio Tinto chief executive officer Jean-Sébastien Jacques said the sale demonstrates Rio Tinto's commitment to further simplifying and strengthening its portfolio, and brings the total divestment proceeds received since 2017 to N$174 billion, of which N$151 billion has been returned to 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 the new ownership," he said.

According to Jacques, the N$1,4 billion contingent payment is linked to uranium spot prices and Rössing's net income during the next seven years. In addition, Rio Tinto will receive a cash payment if CNUC sells the Zelda 20 Mineral Deposit during a restricted period following completion.

"We cannot say more in terms of what the restricted period is. It is the period of the sale of the asset, but I am afraid I cannot say more," he added.

Industry experts who also spoke to The Namibian said they would not be surprised if China General Nuclear Power Group, who own Husab Mine, bought 'Zelda' to mine concurrently with the Husab deposit since this area is midway between both operations.

In fact, it is speculated that given the proximity of two Chinese state-owned mines in the Namib Desert, Beijing might force operational synergies between them.

"That's a matter for the new owners, so we are not entitled to speculate," said Outhwaite.

All eyes will also be on whether the Namibian Competition Commission (NaCC)'s conditions of sale on local employment and procurement guarantees can be enforced, if need be.

The NaCC last month approved the acquisition, believing the transaction is unlikely to result in the prevention or substantial lessening of competition, or in any undertaking acquiring or strengthening a dominant position in the relevant market.

The commission has also set conditions to safeguard employment, local procurement, and maintaining benefits currently derived in terms of taxes and royalties.

The conditions include that there be no retrenchments of Rössing employees for two years, as well as maintaining at least 95% of local employees until the mine reaches the end of its lifespan. The mine is also expected to maintain a ratio of at least 95% local employees at management level.

Meanwhile, experts said US president Donald Trump's decision not to introduce any quotas or other restrictions on US imports of uranium oxide is good news for Rössing, as it will continue to sell to American nuclear power utilities without restriction. In fact, in 2018, 45% of Rössing's production was sold to North America, mainly the US, but also to Canada.

With the sale of Rössing, Namibia will see complete Chinese control of its active uranium mines.

CNUC now owns 69% of Rössing mine, while the Namibian government has a 3% stake, and it has the majority (51%) when it comes to voting rights.

The Iranian Foreign Investment Company is a passive legacy investor in Rössing Uranium, holding a 15% stake that goes back to the early 1970s during the financing of the mine. The Industrial Development Corporation of South Africa owns 10%, while local individual shareholders own a combined 3% shareholding.

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