Rössing to continue operations despite poor uranium prices

Even though the international uranium price is at an all-time low the uranium mine Rössing has “no plans to stop producing.” This was said by Rössing Uranium Limited (RUL) Managing Director Werner Duvenhage to namib times.
Rössing’s future is ensured due to the company currently benefitting from a strong sales contract portfolio. “Our sales contracts are guided by confidentiality agreements with our customers, however, as per our latest report to stakeholders we serve customers in the European, Middle Eastern, African and Asian markets,” Duvenhage said.
Since the meltdown of the Nuclear Reactor at Fukushima in 2011 the international uranium price has been on a downward spiral, recovering very slightly over the past few weeks. On 9 January the spot price for U3O8 (Uranium Oxide) stood at US$22 per pound. It hit an all-time low in November 2016 when the price stood at US$18 per pound – the lowest it’s been since 2003.
“Within the macro-economic constraints of a weak uranium market and exchange rate fluctuations cost optimisation across our operation continues to receive attention,” Duvenhage said. He added that “as during previous challenging periods in our history, Rössing continues to leverage the expertise of our approximately 950 permanent employees to guide the company forward.”
Speculations about Rössing’s future were rife again this year since some long-term contracts for the offtake of the product are expected to run out at the end of this year. Even though Duvenhage didn’t comment on this now, he made these remarks in June 2014. The production at Rössing is only feasible if the international uranium spot price is above US$45 per pound, he revealed then.
During 2016 the international uranium spot price consistently weakened and was eventually down by 45%, reported mining weakly. Various factors have affected the price over the past few years. According to the information centre UxC global inventories of Uranium Oxide are estimated as high as 1.4 billion pounds. Roughly 173 million pounds are needed per year to feed the world’s more than 400 operable reactors which means enough uranium is above ground for the next eight years.
Experts believe a recovery of the price is on the horizon though, which large uranium producers have been predicting for years. The telegraph reported that large reactors in the US and Europe are coming off supply in 2018. “They will come back into the market (to purchase U3O8),” the newspaper wrote. Additionally China is building 60 reactors which are expected to come into the market at the same time. “We are creating the biggest deficit the uranium market has ever seen,” it stated. China’s nuclear ambitions would require a 5-fold increase in uranium supply.
The challenging economic environment over the past few years has promoted many uranium exploration and mining companies to put their operations on ice. A good example is Areva’s Trekkopje mine, which has been mothballed. Plans are underway that the mine will come into production once the price recovers. “We are at the point where there are not enough uranium projects in the pipeline that can adequately meet the coming demand,” said an expert to the telegraph.