Rio Tinto is selling its share in Rössing Uranium mine to China National Uranium Corporation (CNUC) Limited for N$1,5 billion, the company announced.
A statement from the company indicated that the payment is linked to uranium spot prices and Rössing’s net income during the next seven years.
The transaction is said to be the culmination of an extensive assessment of strategic options considered by Rio Tinto concerning Rössing.
“The sale of our interest in Rössing once again demonstrates our commitment to strengthening our portfolio and focussing on our core assets, which deliver sector-leading returns in the short, medium and long-term. Rio Tinto will work closely with CNUC to ensure a smooth transition and ongoing sustainable operations at Rössing,” said Rio Tinto CEO Jean-Sébastien Jacques.
The transaction is subject to certain conditions precedent, including merger approval from the Namibian Competition Commission. The deal is expected to be completed in the first half of 2019.
The news comes two months after The Namibian published a story about the talks to sell, which former mine managing director Werner Duvenhage brushed off as “rumours or market speculation”.
A month ago, Duvenhage, who accepted the position of managing director at Rio Tinto Richards Bay Minerals (RBM) in South Africa, was succeeded by new MD Richard Storrie, who led Rio Tinto’s Jadar project in Serbia over the last five years.
The only difference to this ‘rumour’ was that speculation indicated that the mine would be sold to China National Nuclear Corporation (CNNC). It is understood that CNUC is a Chinese government-owned corporation involved in prospecting and eventually mining overseas sources of uranium. CNUC is a spin-off from the CNNC.
With the sale, Namibia will see complete Chinese control of its active uranium production, with China General Nuclear’s (GCN) Husab mine next to Rössing.
CNNC was previously in talks to take over the recently ‘mothballed’ Langer Heinrich mine of Paladin Energy, but instead adjusted its focus on Rössing.
Rio Tinto owns 69% of the Rössing mine, while the Namibian government has a 3% stake, and it has the majority (51%) when it comes to voting rights. The Iranian Foreign Investment Company is a passive legacy investor in Rössing Uranium, holding a 15% stake that goes back to the early 1970s in the financing of the mine. The Industrial Development Corporation of South Africa owns 10%, while local individual shareholders own a combined 3%.
The ongoing downturn in uranium prices following the 2011 Fukushima disaster has negatively affected most of Namibia’s uranium industry.
Rio Tinto has been on the hunt for a Rössing buyer for several years.
It is speculated that, given the proximity of two Chinese state-owned mines in the Namib desert, Beijing might force operational synergies between them.