Fire Cost Rössing Uranium N$16 Million

A fire early this year at a plant at Roumlssing Uranium cost the company N$16 million, managing director, Werner Duvenhage said.

Apart from the loss in monetary terms, the company also lost production time.

“As we entered 2015, the mine sustained an incident that impacted us in the first quarter of this year. A fire broke out at our final product recovery plant. No employees were injured during the incident and there were no uranium spills in the area, and none of the uranium drummed and stored outside the plant was affected. As only part of the plant was affected, we continued with uranium production,” said Duvenhage in Windhoek on Monday when he released the stakeholders’ report for 2014.

The fire was the second serious accident in two years after the leach tank failure in December 2013. The first quarter of 2014 saw operations gradually being resumed. The tank has been returned to full production, he said.

Roumlssing will next month mark 40 years of its operations in Namibia.

Duvenhage said in the history of Roumlssing, 2014 will undoubtedly be remembered as a tough year in which a number of operational changes were made to ensure progress was made in securing the mine’s future.

Global Influences

The challenging times currently experienced in the uranium industry is mainly because of global influences.

“It was a tough year because the uranium price continued to decline globally, putting substantial pressure on our business, with the average uranium spot market price at US$33lbs, much lower than the US$38lbs average in 2013,” he said.

The 2011 tsunami in Japan and its impact on the Fukushima nuclear plant still continued to plague the uranium market in 2014, with excess supply causing a decline in market prices. Nuclear plants in Japan remained off-line for most of the year.

Supply has increased over the three years since the Fukushima incident.

“This is a recipe for continued weak prices in the near term. Utilities are holding large stocks in all forms, which defer their need to buy for one to three years on average,” said Duvenhage.

He said the long-term outlook for the nuclear industry remains encouraging as a number of new mines are expected to enter production in the next couple of years, but the industry will need new mines to be developed in the next five years in order to meet the demand later this decade and in the post-2020 period.

In 2014, Roumlssing embarked on a curtailed operational plan that involved moving to a non-continuous operation in the mining and processing areas, with the objective of producing only enough uranium to meet our long-term sales commitments.

Curtailed Operations

“We also embarked on an organisational redesign exercise. This changed our 7-day, 24-hour operation to a 5-day, 24-hour operation, and a decision to reduce our workforce,” he said.

Cost saving initiatives allowed the company to save N$149 million.

With the curtailed operations, the mine produced 1 543 tonnes of uranium oxide, down from 2 409 tonnes in 2013, which accounts for about 2,3% of the world production of primary produced uranium.

The impact of lower prices and the lower production figures strained revenue which reduced by 19% compared to the previous year, and in turn led to a net loss after tax of N$91 million, compared to a net profit of N$32 million in 2013. Roumlssing suffered losses in 2012, 2011 and 2010. Turnover in 2014 was N$2, 4 billion, down from N$2,9 billion in 2013.

“We have an excellent supply of uranium bearing ore from our open pit, a number of sales contracts running beyond 2017,” said Duvenhage. The company employs about 900 people.

Source : The Namibian