Rössing struggling to make money

PERTH – Rio Tinto flagship Rössing uranium mine is losing money, as the spot price for uranium, the key fuel for nuclear reactors, continues to languish in the wake of Japan’s atomic crisis, Dow Jones Newswires quoted a senior Rio executive yesterday.

Several uranium projects planned globally are stalled because the spot price isn’t high enough to justify development, said Andy Lloyd, chief development officer for Rio Tinto’s uranium unit.The spot price of uranium oxide, the most actively traded compound of uranium, was US$52,75 a pound on July 4, according to US-based UX Consulting Co. This is down from above US$70 a pound in January.Lloyd, speaking to reporters on the sidelines of the Boao Energy, Resources and Sustainable Development Conference in Perth, declined to say what uranium price Rio needs for Rössing – the world’s third-largest uranium mine by production – to be profitable.The medium-term outlook for uranium has been clouded by explosions and radiation leaks at the Fukushima reactor complex in Japan following the devastating March 11 earthquake and tsunami, as governments re-think strategies that relied on generating more nuclear power.At the same time, the industry has faced increased concerns about sovereign risk in countries with large deposits of uranium.In April, Namibian Mines and Energy Minister Isak Katali said uranium, copper, gold, zinc and coal have been declared strategic minerals to allow for exclusive exploration and mining of them by state-owned Epangelo Mining Co.Katali’s comments triggered sharp falls in share prices of uranium mining companies in the days that followed, including Extract Resources Ltd, which owns the undeveloped Husab deposit adjacent to Rössing.Lloyd said Namibia has been a model investment location in Africa in the 35 years that Rio Tinto has operated there.’They [Namibia] have a number of low-grade uranium mines that, at the moment, aren’t making any money, such as Rössing,’ he said.That means it is natural for the government to want to increase its share of mining revenues if it can, he said.’There is long dialogue yet to play out, and we remain very confident that Namibia is going to reach sensible conclusions on how to make its industry competitive,’ he said.Rio has the option to develop new uranium resources at Rössing, which at current production rates isn’t due to run out of ore until 2023, he said.Rio has been discussing a tie-up with Extract that would involve ore from the Husab project being processed at the Rössing facilities.But Lloyd said that Rössing has ‘significant expansion capability in its own right’.’Rössing is a big, low-grade resource, therefore its resource can expand as the [uranium] price increases,’ he said.- Dow Jones Newswires

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