Africa Mining Namibia Natural Resources

Chinese corporations take over uranium mining in Namibia

Chinese state-owned entities have effectively taken control of uranium mining in Namibia, following the takeover of Rössing uranium mine by China National Uranium Corporation Limited (CNUC).

Rio Tinto announced on Tuesday, 16 July 2019, that it has completed the sale of its 69 percent stake in Rössing Uranium Limited, which owns the Rössing mine near Arandis in Erongo region.

The Rössing uranium mine situated in the Namib Desert is the world’s longest-running open pit uranium mine.

The mine has been producing and exporting uranium oxide from Namibia to nuclear power utilities around the world since its inception in 1976.

The leading global mining group listed in the Australian Stock Exchange and London Stock Exchange-listed sold the stakes to CNUC for an initial cash payment of 6.5 million-plus dollars a contingent payment of up to 100 million dollars.

“This sale demonstrates Rio Tinto’s commitment to further simplifying and strengthening our portfolio and brings the total divestment proceeds received since 2017 to 11.2 billion dollars, of which 9.7 billion dollars has been returned to our 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 new ownership,” says Rio Tinto chief executive J-S Jacques in a statement.

The 100 million dollars contingent payment is linked to uranium spot prices and Rössing’s net income during the next seven calendar years.

In addition, Rio Tinto will receive a cash payment if CNUC sells the Zelda 20 Mineral Deposit during a restricted period following completion.

Rio Tinto announced in November 2018 that has struck a deal with CNUC to sell its stakes in Rössing Uranium.

The Namibian Government owns 3% and it has the majority (51 percent) when it comes to voting rights.

The Iranian Foreign Investment Company is a passive legacy investor in Rössing Uranium, holding 15 percent that goes back to the early 1970s in the financing of the mine.

The Industrial Development Corporation of South Africa owns ten percent, with the remaining three percentowned by individual shareholders.

The Namibian Competition Commission (NCC) announced in June 2019 that it has approved the acquisition of Rössing Uranium Limited by CNUC with conditions that whereby the latter intends to acquire the interest issued share capital of Rio Tinto Overseas Holding Limited, thereby gaining control of the mine.

The sale of Rössing mine has effectively placed China in control of the Namibian uranium mining sector.

The takeover started in 2012, Hong Kong-based Taurus Minerals Limited acquired 90 percent stakes in Swakop Uranium, which is operating the Husab Mine, which is adjacent to Rössing mine.

The China Guangdong Nuclear Power Group own 60 percent of Taurus, with 40 percent owned by China-Africa Development Fund, which was set up by China Development in 2017.

CGNPC has invested two billion dollars in developing Husab mine, the largest highest-grade uranium deposit in Namibia and fourth-largest in the world. The remaining ten percentof Swakop Uranium is owned by the Namibian Government through Epangelo Mining Company.

The mine started production in 2016. In 2014, Australia’s Paladin Energy sold 25 percent stakes in Langer Heinrich uranium worth 190 million dollars to China Uranium Corporation, a subsidiary of China National Nuclear Corporation.

China has set an ambitious plan to be the world leader in nuclear reactors. With plans to build up to 100 nuclear reactors, Chinese entities have been buying uranium mines in Africa and other parts of the world including Canada and Kazakhstan.

The World Nuclear Association noted that Namibia has significant uranium mines capable of providing 10% of world mining output.

It added that Uranium was discovered in the Namib Desert in 1928 but was not until intensive exploration got underway in the late 1950s that much interest was shown in Rössing.

Rio Tinto discovered numerous uranium occurrences and in 1966 took the rights over the low-grade Rössing deposit, 65 km inland from Swakopmund.

Two other significant deposits found in early exploration were Trekkopje, a calcrete deposit 80km north-east of Swakopmund and near Rössing, and Langer Heinrich, a calcrete deposit discovered in 1973 by Gencor, 80 km inland from Walvis Bay and 50 km southeast of Rössing.

Source: Political Analysis

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