Rössing Uranium today launched its 2012 stakeholders report in which it addresses uranium market conditions, the company’s performance in 2012, corporate social investment and its contribution to the Namibian economy.
The company's Managing Director, Chris Salisbury says given the downturn in commodity prices and the volatility in the global economy, Rio Tinto has committed to its shareholders to extract greater shareholder value.
“This means driving down operational costs, critically reviewing all capital spend and projects, as well as continually reviewing the portfolio of businesses within the group. There has been significant speculation in the local media regarding the future of Rössing as part of the Group but there are no current plans to sell the mine,” he says.
He adds that, during 2012 Rössing made significant improvements across the range of business performance metrics.
“Firstly and most importantly we improved safety performance significantly with a 40% reduction in injury rates over 2011. Operational performance also improved significantly, including improvements in productivity, efficiency and cost performance. Processing plant throughput increased substantially, and this combined with the improved uranium grade boosted uranium oxide production by 26%,” he says.
He continues that that in 2012 the operation produced 2 699 tonnes of uranium oxide, which accounts for about 4% of the world production of primary produced uranium oxide.
“However, the 2011 tsunami in Japan and its impact on the Fukushima
nuclear plant continued to plague the uranium market in 2012, with excess
supply causing a decline in market prices. The impact of the current depleted
uranium prices and lower sales volumes strained the company’s operational
cash flow, resulting in an operational loss for 2012 (N$474 million, 2011-
N$464 million). Uranium prices continued to soften through 2012 and have
remained in the low 40’s US$/lb for the 2013 calendar year to date.
Our turnover in 2012 was N$2.88 billion, down from N$3.26 billion in 2011,
reflecting the lower prices and decreased sales volume,” Salisbury says.
He adds: “Rössing has a strong sales portfolio, with a healthy mix of long-term and short-term price exposures, which assists to strengthen our competitive
position. The pressure however remains to drive operating costs to remain
competitive. Positioning Rössing to withstand short- and medium term economic
challenges has become part of the daily business of the business. These
efforts are paying off – 2012 unit costs decreased over 2011 by 31%. Cost
containment and increased efficiency will remain key focus areas, along with
business improvement work on the various operational and business
processes of the organisation. During the first quarter of 2013, significant
value has already been derived from a range of cash generation initiatives.
The major organisational restructuring announced in February of this year is
essentially complete and the reduction in employee related costs will further
reduce the cost base of the organisation.”
Rössing invested N$141 million in capital expenditure in 2012 and over
N$1.5 billion over the past five years as part of our expansion and
sustaining capital expenditure.
“We have a number of expansion and extension opportunities, but these will depend on future market conditions. The operation now has an employee complement of around 1,235 employees, of whom 99% are Namibians. Rössing has a strategic focus on training and developing its employees, and addressing skills shortages. We have invested more than N$80 million in training and development over the past five years. The company continues to invest in its human capital by offering a wide range of improvement programmes and leadership development programmes, and capitalises on Rio Tinto’s exchange and secondment programmes,” he says.
Rössing Uranium is a major player in the Namibian economy, with significant
contributions in sourcing of goods and services, taxes, training, development
as well as community investment.
Our spending in Namibia is significant, which leads to a long chain of value
addition throughout the economy.
He states that In 2012, the company spent N$2.2 billion on goods and services, generated N$110 million in royalty payments, generated N$176 million in PAYE payments, made N$270 million of payments to state owned enterprises, and
paid N$817 million in employment costs.
Rössing remains a responsible corporate citizen with corporate social
responsibility programmes extending into the work of the Rössing
Foundation, providing support in the fields of the environment, education,
health and recreation for the past 30 years.
The mine has a comprehensive corporate social investment programme
as well as contributing to the Rössing Foundation at a fixed percentage of
profits. Over the past five years, more than N$137 million was invested in
social investment programmes.
Despite the current depression in uranium price, the world’s demand for
clean energy continues to rise, and forecast demand is expected to be
strong in the medium to long term.
“As we work our way through the current challenges of our business
environment, I am confident that Rössing will return to profitability and
continue to be a major supplier of energy to the world, as well as delivering
value to our shareholders and other stakeholders,” he concluded.