Identifier
Created
Classification
Origin
09WINDHOEK200
2009-06-03 10:54:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Windhoek
Cable title:  

Rossing Uranium Mine Has Ambitious Plans

Tags:  EMIN ENRG EPET EINV ETRD KNNP SENV WA 
pdf how-to read a cable
VZCZCXRO9275
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHWD #0200/01 1541054
ZNR UUUUU ZZH
R 031054Z JUN 09
FM AMEMBASSY WINDHOEK
TO RUEHC/SECSTATE WASHDC 0552
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHC/DEPT OF LABOR WASHDC
RUEHBJ/AMEMBASSY BEIJING 0089
RUEHBY/AMEMBASSY CANBERRA 0029
RUEHLO/AMEMBASSY LONDON 0138
RUEHMO/AMEMBASSY MOSCOW 0085
RUEHNE/AMEMBASSY NEW DELHI 0025
RUEHOT/AMEMBASSY OTTAWA 0040
RUEHFR/AMEMBASSY PARIS 0223
RUEHSG/AMEMBASSY SANTIAGO 0007
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE
UNCLAS SECTION 01 OF 03 WINDHOEK 000200 

SIPDIS
SENSITIVE

STATE PLEASE PASS USAID
STATE PLEASE PASS USGS
DEPT FOR AF/S, EEB/ESC AND CBA
DOE FOR SPERL AND PERSON
DOC FOR ITA/DIEMOND

E.O. 12958: N/A
TAGS: EMIN ENRG EPET EINV ETRD KNNP SENV WA
SUBJECT: Rossing Uranium Mine Has Ambitious Plans

REF: WINDHOEK 159

Not for Distribution on the Internet

-------
Summary
-------

UNCLAS SECTION 01 OF 03 WINDHOEK 000200

SIPDIS
SENSITIVE

STATE PLEASE PASS USAID
STATE PLEASE PASS USGS
DEPT FOR AF/S, EEB/ESC AND CBA
DOE FOR SPERL AND PERSON
DOC FOR ITA/DIEMOND

E.O. 12958: N/A
TAGS: EMIN ENRG EPET EINV ETRD KNNP SENV WA
SUBJECT: Rossing Uranium Mine Has Ambitious Plans

REF: WINDHOEK 159

Not for Distribution on the Internet

--------------
Summary
--------------


1. (SBU) Rio Tinto's Rossing Uranium is Namibia's flagship mine. It
has been in continuous operation since 1976. The mine currently
produces about 7.8 percent of global uranium oxide (U3O8) and
expects to increase to 10 percent by 2012 when current expansions
are completed. Rossing accounts for seven percent of Namibia's GDP.
Due to an extended period of low uranium prices during the 1990's
and early 2000's, the mine was scheduled to be closed in 2007. The
upturn in prices since 2003, however, has ensured the mine's
continued profitable operation and survival. The life of the
Rossing Uranium mine could be extended beyond the current estimated
20 years, but this depends on continued expansion of the nuclear
power industry and technology developments. End Summary.

--------------
Uranium Supplies
--------------


2. (SBU) Namibia is the fourth supplier of uranium in the world.
Rossing Uranium, in combination with Paladin Resources' Langer
Heinrich mine, produces 10-11 percent of global U3O8 supply. This
could increase to 20 percent by 2015, if all proposed and planned
new developments of some eighteen identified uranium prospects and
projects go ahead (septel).

--------------
Rossing Uranium Mine
--------------


3. (SBU) Emboffs from Embassy Pretoria and Embassy Windhoek visited
Rio Tinto's Rossing Uranium mine on April 2. Rossing Uranium Mine
exploits one of the biggest and only economically viable
granite-hosted (alaskite) uranium deposits in the world. The mine,
located about 70 kilometers north-east of the coastal town of
Swakopmund, covers a license area of 180 square kilometers, yet only
20 square kilometers are in operation. Rossing has mined one
billion tons of rock and produced 80,000 tons of uranium oxide (U3O8
or yellow cake),equivalent to 16 percent of global demand, since

the mine opened in 1976. Total uranium oxide production was 9.0
million pounds (approximately 4,000 tons) in 2008, up from 6.7
million pounds (3,000 tons) in 2007. The mine's designed capacity
is 10 million pounds per year (4,500 tons),which Rossing plans to
reach in 2012.


4. (SBU) The mine currently produces about 7.8 percent of global
U3O8 which is projected to increase to 10 percent by 2012 when
current expansions are completed. Rossing also accounts for seven
percent of Namibia's GDP. A feasibility study to expand mine output
by 1,000 tons of U3O8 (to 10 million pounds per year) was carried
out in 2008. Approval for the project is expected in mid-2009.
Low-grade ore is currently being stockpiled for that purpose.


--------------
Economics and Marketing of Rossing's Uranium
--------------


5. (SBU) Rossing Mine's prospects have fluctuated with uranium
prices in recent years. In December 2003, demand for U3O8 was low,
costs were increasing, and the spot price was below $15 per pound.
At the time the mine was projected to close by 2007. Spot and
contract prices have since increased as a result of perceived future
uranium shortages, with a peak of $136 per pound in mid-2007.
Despite the current drop to $40-$50 per pound, Rossing's uranium is
sold on long-term contracts with an estimated average price of USD
68 per pound. Contracts are typically for 3-5 years with delivery

WINDHOEK 00000200 002 OF 003


lead-times of 2-4 years. Rossing and its customers negotiated new
long-term contracts in 2007. Rossing's selling price moves with the
spot price for uranium within a certain band (i.e. there is a price
floor and ceiling). The recent fall in the uranium spot price has
pushed the selling price closer to the price floor thus suppressing
Rossing's margins on each barrel of yellow cake delivered. Sales
destinations for Rossing's uranium are:

-- 41 percent to North America;
-- 24 percent to Japan;
-- 25 percent to Asia; and
-- 10 percent to the European Union.

Rio Tinto has a 69 percent equity stake in Rossing Uranium and
controls the mine's operations (reftel).

--------------
Rossing Mineral Deposit
--------------


6. (SBU) Geologically, the Rossing deposit is unique in that it is
the largest known granite-hosted primary uranium orebody of economic
importance in the world. Most other deposits are based on secondary
mineralization, the uranium having been leached out of primary rocks
and precipitated as a secondary accumulation elsewhere -- in river
beds for example. The Rossing deposit is low-grade, averaging
200-300 parts per million (ppm) or 0.02-0.03 percent uranium. Its
primary mineral is uraninite (uranium dioxide or UO2),plus other
minor secondary minerals. The presence of calcium in the deposit
consumes large quantities of leach acid and renders sections of
would-be ore unprofitable.

--------------
Conventional Mining at Rossing
--------------


7. (SBU) Rossing is an open-pit mine that employs conventional
drilling, blasting, loading, and hauling methods to exploit the
deposit. The pit currently covers an area of 3-by-1.2 square
kilometers and is more than 345 meters deep. The mine produced
4,000 tons of U3O8 or "yellow cake" in 2008, from 47 million tons of
mined rock, of which 13 million tons was treatable ore. The
operation consumed 3.5 million cubic meters of fresh water (to
supplement water recycled from the plant) and required 32 megawatts
of power. Ore is transported to primary crushers and then conveyed
to a coarse ore stockpile to await further processing. Low-grade
product is stockpiled for later processing via heap-leaching, and
waste is stacked on permanent waste dumps. A full explanation of
Rossing's method to recover uranium from ore is available at:
http://www.rossing.com/uranium_production.htm

-------------- --------------
Water is Precious - Recycle and Desalinate Sea Water
-------------- --------------


8. (SBU) Namibia is an arid country and the Rossing mine area
normally receives annual rainfall of only about 30 millimeters.
However, this occurs as torrential downpours resulting in
flash-flooding that can damage civil works and mining operations, so
the mine has employed a number of water mitigation and capture
programs. Rossing recycles 60-70 percent of its process water and
replenishes it annually with about 3.5 million cubic meters of fresh
water, which is pumped from stations located in the local river
beds. Underground water is continuously monitored for traces of
uranium pollution. However, the prevalence of uranium in the
surrounding rocks and the lack of data on naturally-occurring
uranium levels in the area make it difficult to assign blame for
uranium pollution to the mine. Rossing is attempting to establish a
baseline of naturally-occurring background radiation exposure.
(Note. The French nuclear company Areva is building a $165-million
desalinization plant near the town of Swakupmund to supply water to
its Trekkopje Uranium Project under development. Excess water will
be sold to local water authorities and mines. End Note.)

WINDHOEK 00000200 003 OF 003



--------------
Mine Health and Safety Taken Seriously
--------------


9. (SBU) Rossing mine recently achieved 2-million man-hours of work
without a major incident that has interrupted operation of the mine.
On the health side, although the mine has low-grade ore and
consequently low-grade radiation that is only slightly higher than
the levels occurring naturally, intake of radioactive dust and
exposure to radiation by staff is regularly monitored. HIV/AIDS was
not raised as a major issue by mine management. According to
management and the Namibian Chamber of Mines health advisor Dr Wotan
Swiegers, the relative isolation of local communities around Rossing
has limited the incidence of AIDS at the mine to less than 10
percent, compared to the country's average of 15.4 percent.
Nevertheless, the mine provides clinical facilities and
anti-retro-viral medication to employees paid for by the company's
medical insurance.

--------------
Labor Skills are Scarce but Improving
--------------


10. (SBU) Namibians makeup 97 percent of Rossing's labor force,
more than half of whom have been in service for 15 years. The mine
has a labor pool of 1,300 permanent employees and 400 contractors,
yet still faces a shortage of skilled people. With several new
uranium mines coming on-line in the next two years, Rossing is
poised to lose some of its most experienced and skilled personnel.
It has already lost some personnel to Paladin Resources' Langer
Heinrich mine. However, the global economic downturn has resulted in
the closure of four Namibian copper mines, and the halting of most
diamond mining operations, freeing up labor for operational mines
such as Rossing.

--------------
Socio-Economic Development a Major Goal
--------------


11. (SBU) The nearby town of Arandis was established in 1976 by the
Rossing mine to house mine employees. Despite being proclaimed an
independent town in 1994, when the mine was originally scheduled to
close Arandis was still almost completely dependent on Rossing for
its survival. In response, Rossing opened its Rossing Foundation
office in Arandis. The Foundation strives to provide residents and
their children with advanced, practical competencies in English,
reading, science, and mathematics. This includes small business
training, health facilities, support for small businesses and
miners, and a computer-based, voluntary, educational center for
school children, teachers, and parents. The Foundation became fully
operational in January 2004.

--------------
Embassy Team Visit to Rossing Uranium
--------------


12. (SBU) Embassy Windhoek wishes to thank Embassy Pretoria's David
Young and Paul White for their assistance with the Rossing visit.

MATHIEU