Rossing Uranium Mine in 2008

Rössing’s business at a glance – 2008

Rössing Uranium’s vision is to maximise the value delivered to our shareholders by being a safe, significant and growing long-term supplier of uranium to the world nuclear power industry.

Globally, nuclear fuel demand is set to increase significantly as concerns about climate change issues and greenhouse gas (GHG) emissions, security of energy supplies, and the increasing cost of fossil fuels encourage a renaissance in nuclear power-generation plants. Many countries are now re-evaluating their energy policies. Nuclear energy, seen by many as a clean, efficient energy source which produces no GHGs, is becoming increasingly popular.

Understandably so, this renewed interest is reflected in the prices obtained for uranium oxide. Several years into a price recovery, the market outlook for uranium and, therefore, for us, remains positive. Although short-term spot and longterm market prices have declined from an all-time high around August 2007, the average price realised showed an increase in 2008. The decline that was experienced can be attributed to the ongoing global financial crisis – from which the uranium market has not been immune.

Nevertheless, the nuclear renaissance is under way and large, experienced suppliers like us are in the best position to benefit.

Human resources

Gearing ourselves for growth, we began to augment our human resources and machine power from 2007. By the end of 2008, our staff complement totalled 1,307 permanent employees, and an average of 1,000 contractors on site every day. In this context, our training and development programmes received special attention. Nearly 500 participants benefited directly from these programmes, in which a total of N$17.7 million was invested.

As regards mining output, and in comparison with our output during the past 20 years, we produced a record 4,108 tonnes of uranium oxide, up from 3,046 tonnes the previous year.

To achieve this, 34 million tonnes of waste rock were removed and 13 million tonnes of ore were processed. This we did safely, achieving nearly three million labour hours without a lost-time injury, although considerable work remains to get injuries down to zero. Since we believe all injuries and accidents are preventable, safety will continue to be a key priority, especially amidst increased production activities.

The year under review also saw a major international rebranding exercise for Rio Tinto. Rebranding was implemented at Rössing in October 2008, and led to our new visual identity. This was done within the framework of “One Rio Tinto – Doing it right”. The rebranding of Rössing aims to capitalise on Rio Tinto’s strong international presence, in order to create new business opportunities and allow the Rio Tinto Group to access new resources in terms of people, land and capital.

Our rebranding also marked a new chapter in Rössing’s history, and was a perfect opportunity to reposition ourselves as a renewed company, remaining on our path of growth.

Rossing Open Pit
A view of the open pit and surrounding landscape from the “Hill Jim” viewpoint.
At 345 metre, the pit is deep enough to accommodate the Eiffel Tower.

Community

Our community relations continued to receive special attention in 2008, since healthy dealings with our neighbours is one of the pillars of sustainable development on which we build. Active support in the form of donations and sponsorships focused on community activities that promoted development. Our direct donations in 2008 amounted to just over N$6 million, compared with N$5.8 million in 2007 and N$8.7 million in 2006, when the mine celebrated 30 years of production.

he Rössing Foundation, established to implement and facilitate our corporate social responsibility activities within the communities of Namibia, sees to a broad agenda of community development, focusing specifically on education, health, poverty alleviation, innovation, the environment, and enterprise development. The Foundation implements these programmes and projects in various sectors and in partnership with numerous stakeholders.

The Foundation also assisted the Arandis Town Council in its endeavours to diversify the town’s economy by 2016, in order to reduce its financial dependence on Rössing and the surrounding mines.

Our payments for goods and services amounted to N$2.3 billion in 2008, of which N$1.45 billion was paid to our Namibian suppliers. This represents 62 per cent spent in Namibia, 32 per cent in South Africa and 6 per cent with suppliers in the rest of the world.

In line with our commitment to the Erongo Region, we have spent nearly half of our Namibian expenditure in the Region - just more than N$700 million. Eighty per cent (N$563 million) of the spent in the Erongo Region was with our suppliers in Swakopmund, 19 per cent (N$131 million) in Walvis Bay and 1 per cent (N$8.7 million) in Arandis.

Environment

We recognise that our business activities have an impact on the environment in which we operate. Through various environmental programmes identified not only by us but also through stakeholder engagement, we have committed ourselves to specific areas of continuous improvement in order to lessen this impact. Nonetheless, increased production activity led to increased energy and water usage during the review period.

In 2008, energy usage was 140.9 MJ/t of ore processed. This was above the annual target of 117 MJ/t of ore processed set to conform to the predetermined Rio Tinto targets. The GHG emission intensity was 54.2 tonnes CO₂ equivalent (CO₂-e) per tonne of uranium oxide (U₃O₈) produced, with the target being 51.6 tonnes CO₂-e/t of U₃O₈ produced. Our CO₂ emission per unit of production was lower than the previous year, and near target due to 4,108 tonnes of uranium oxide having been produced during the year, as well as good grade throughput in the Processing Plant.

Our use of fresh water totalled 3.7 million cubic metres, or 10,048 m3/day, against our targets of 3.5 million m3 or 9,590 m3/day. Water consumption for 2008 was higher than expected, therefore, at a rate of 0.29 cubic metres per tonne (m3/t) of ore milled, against a target of 0.26 m3/t of ore milled. In 2009 we aim to implement various watersaving projects, although future mine extensions will require additional dust suppression – decreasing savings to a projected 0.3 million m3 per year.

As a major consumer of electricity in Namibia, it is essential that we ensure optimal energy use, since a constant and stable power supply is one of the critical risks to mining operations. To this end, a Power Efficiency Department was established in 2008, with the key responsibility of ensuring efficient electricity consumption by tracking and optimising system efficiencies, as well as assisting in our aim to decrease our energy usage.

Early in the year, a Social and Environmental Impact Assessment and Management Plan for three of the mine’s expansion projects was submitted to Namibia’s Ministry of Environment and Tourism, whereupon the Ministry issued us with an environmental clearance certificate. These projects include the building of a radiometric ore sorting plant, the mining of a small satellite ore body known as SK4 about 1km to the east of our current open pit, and the building of a sulphur-burning sulphuric acid plant.

The global financial crisis had an impact on the sourcing of a number of our principal consumables with some of our suppliers closing down.

With regard to sulphuric acid, the demand in the market increased drastically, which encouraged us to investigate long-term alternatives, such as constructing our own sulphur-burning sulphuric acid plant on-site, with potential power recovery. We concluded a feasibility study at the end of 2008 with the decision to defer this project until expansion is approved that will require additional acid to make the project more viable.

An achievement for 2008 was the construction of a pilot heap leach processing facility that tests the treatment of previously uneconomical ore and lowers the overall operating cost. We will continue with the feasibility study in 2009.

Historically, our mine lease has been under-explored, compared with levels of exploration around other worldclass ore bodies. The establishment of an Exploration Department in March 2008 allowed significant advances to be made in developing our geologists’ technical capabilities, and establishing the foundations for a modern and effective exploration programme.

Furthermore, we embarked on an extensive exploration drilling programme in 2008 to increase our understanding of the SK ore body. The SK ore body is adjacent to the main SJ ore body, also known as the mine’s open pit. In 2009, our focus will be less on exploration and more on productionrequired drilling. This is partly due to the world financial downturn, but more importantly to the fact that the existing SJ ore body requires more geological information, sourced from drilling, to be collected in the coming year.

With our continued drilling and development programmes, we are well-positioned to expand and further extend the life of our operations. This will enable us to continue to remain a significant uranium producer and a leading contributor to the Namibian economy, as we have been for the past 32 years.

At the foundation of this vision is our business approach: we integrate sustainable development into every aspect of the business in order to support sound environmental practices, economic and social development, and corporate governance. This approach is depicted in our Strategic Goals diagram below.

In light of the global financial crisis, we followed a cautious approach in all areas of cash flow management and, especially, capital expenditure. While our outlook for 2009 is positive and the company is sound, the fast-changing conditions around us necessitates that we tighten our belts and slow our pace of expansion, without jeopardising our long-term production capacity.

“Economic growth [in Namibia] is forecasted to slow to 1.0% during 2009 from an estimated growth of 2.7% owing to the decline in the diamond output. However, the short-term outlook for uranium mining remains favourable, despite concerns over water availability and the moratorium imposed, as demand and prices remain buoyant.”

Economic Outlook, Bank of Namibia, February 2009

Location

The mine site is located about 70km north-east of Swakopmund, and encompasses a licence area of about 180km2, of which 20km2 are used for mining, waste disposal and processing.

Click on the map to enlarge

Mining is done by blasting, loading and hauling from an open pit, referred to as the SJ pit, that measures 3km by 1.2km, and is 345m deep.

Rössing’s shareholders

Rio Tinto owns the majority of shares (69 per cent) in Rössing Uranium Limited. The Namibian Government has a 3 per cent shareholding, but it has the majority (51 per cent) when it comes to voting rights. The Iranian Foreign Investment Company owns 15 per cent, a stake that was acquired during the set-up of the company in the early 1970s. The Industrial Development Corporation (IDC) of South Africa owns 10 per cent while local individual shareholders own a combined 3 per cent shareholding. The shareholders have no uranium product off-take rights.