Rössing Breaks Even After Three Straight Losses

RIO Tinto ‘s Roumlssing Uranium broke even in the 2013 financial year recording a profit of N$32 million. The company had made losses in 2010, 2011 and 2012.

“Our productivity improved significantly. We saved more than N$300 million in a wide range of cost reduction activities across the mine,” Managing Director, Werner Duvenhage said on Wednesday when he released the 2013 Report to Stakeholders.

He said the impact of lower prices, despite the improvements in uranium production and unit costs, strained operational cash flow.

The turnover in 2013 was N$2,9 billion, up from N$2,8 billion in 2012.

Roumlssing produced 2 409 tonnes of uranium oxide down from 2 699 tonnes in 2012.

Duvenhage said positioning Roumlssing to withstand short- and medium-term economic challenges has become part of the company’s survival plans.

He said 2013 was a tough year because the uranium price continued to decline globally, and nuclear plants in Japan remained offline for most of the year. The 2011 tsunami in Japan and its impact on the Fukushima nuclear plant continued to plague the uranium market in 2013, with excess supply causing a decline in market prices.

But he said the long-term outlook for the nuclear industry remains encouraging as few new mines are expected to enter production in the next few years but said 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.

“Over the years, we have seen price cycles from highs of over US$100 per pound to lows of US$10 per pound.”

“In contrast to the market volatility of 2011, the uranium market in 2013 was relatively stable, both in the spot and long-term markets. The spot price began the year at US$44 per pound, but gradually fell below the US$40 per pound, for the first time since early 2006,” Duvenhage said.

Roumlssing paid N$83 million in royalty payments and N$143 million in PAYE.

He said last week, the Roumlssing board gave the go-ahead for the management to review its current business operations.

“This is our chance to review our operations and come up with the most feasible survival option. What we foresee is that with the input from all employees, we will have to come up with a plan that would see us through this difficult period,” he said.

The company has 1 141 employees, after 395 were declared redundant as part of cost-cutting. Duvenhage said more job cuts are expected. “It is unavoidable”, he said.

Source : The Namibian