Namibia authorises Chinese acquisition of Rio Tinto's RossingPublished by MAC on 2019-07-30
Source: World Nuclear News (2019-07-01)
Rössing sale gets final approval
World Nuclear News
1 July 2019
The Namibian Competition Commission has conditionally approved China National Uranium Corporation’s (CNUC) acquisition of Rössing Uranium Limited (RUL). It is the only approval needed for the transaction to be completed. Rössing, the world's longest-running open pit uranium mine, has been in operation since 1976 and has a nameplate capacity of 4500 tonnes U3O8 per year.
Rössing is located 12 kilometres from the town of Arandis, 70 km inland from the coastal town of Swakopmund in Namibia's Erongo region.
CNUC intends to acquire the entire issued share capital of Rio Tinto Overseas Holding Ltd, which will give it control over RUL, owner of the Rössing mine. Rio Tinto announced in November a binding agreement to sell its 68.62% stake in RUL to CNUC - part of China National Nuclear Corporation - for up to USD106.5 million. Rio Tinto said in May that all other approvals had been successfully obtained and conditions pertaining to the agreement had been met.
The commission said the proposed transaction was "unlikely" to impede competition, but it “does give rise to significant public interest concerns”, including employment, the bundling of tenders for outsourced service, goods and/or products, transfer pricing, and the dominance of the local uranium sector.
It has therefore imposed conditions to safeguard employment and local procurement, and to maintain tax and royalty benefits. Among other things, no merger-specific retrenchments of RUL employees will be permitted for two years, and the company will be required to maintain a ratio of 95% local to foreign employees over the lifespan of the mine. Any non-Namibian person appointed at management level will be limited to a two-year fixed-term contract.
RUL will not be able to change its 2013 procurement policy to provide less favourable terms to local suppliers and it has to put in place measures to ensure local Namibian small and medium-sized enterprises benefit from procurement practices.
In a report to stakeholders in May, RUL Managing Director Richard Storrie said the proposed transaction would offer the "best possible future" for Rössing, which, as a low-grade uranium mine, remains at the higher end of the uranium cost curve.
"With the uranium market not expected to make a significant recovery in the short to medium term, the reducing contract portfolio will not provide sufficient mitigation for the high unit cost," he said. "The vertical integration into CNNC through its subsidiary CNUC, opens many opportunities for both Rössing and its stakeholders, securing a bright future to which we can go forward with confidence."
Rio Tinto is the majority owner of RUL. The Namibian government has a 3% shareholding, but has a majority of 51% in terms of voting rights. The Iranian Foreign Investment Company is a passive legacy investor, with a 15% stake. The Industrial Development Corporation of South Africa owns 10%, while local individual shareholders own a combined 3%.