Rössing Uranium - building our future
(6 June 2013)

FLTR - Chris Salisbury - Rössing MD and Penda Kiiyala - Rössing GM External Affairs - 6 June 2013.jpg

Members of the Media

It gives me great pleasure to be here today and talk to you about Rössing Uranium, at the time of the launch of our 2012 stakeholders report.

We have been a feature of the Namibian economy for over 35 years and therefore I believe that Rössing is well versed in the nation's mining business.

Today I would like to cover with you the following topics:

  • Rössing in the context of the Rio Tinto Group
  • Uranium market conditions
  • The company's performance in 2012, and
  • Our corporate social investment and the broader contribution of Rössing to the Namibian economy

Let me first place Rössing within the context of Rio Tinto. Rössing is a Rio Tinto Group company which is one of the largest diversified global mining businesses with operations across Africa and the globe.

This year Rio Tinto has been in business for 140 years.

Our 71 000 employees work in more than 40 countries across six continents. We are strongly represented in Australia and North America, and also have significant businesses in Asia, Europe, Africa and South America.

This global presence, and our expertise in operating excellence, technology and marketing, enables Rio Tinto operations to supply the right product, at the right quality, at the right time.

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.

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%.

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.

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 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.

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. In 2012 we

  • 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.

I commend the Rössing Stakeholders Report for 2012 to you which is also available on our website www.rossing.com.

Chris Salisbury
Managing Director
Rössing Uranium Limited

Penda Kiiyala
General Manager External Affairs
Rössing Uranium Limited
Tel +264 61 280 9111