Namibia’s largest uranium mine, Rossing Uranium, said Monday that it would continue to dig for uranium but warned that the global eco n omic financial crisis had severely strained its balance sheet.
Rossing, which has been operating for over three decades, is the first uranium m iner in Namibia to warn of its shaky balance sheet as the economic recession ema n ating from US and European economies takes its toll on African economies.
Global resources group, Rio Tinto, owns a 69 per cent stake in Rossing, which su pplies about eight per cent of uranium on the world market.
Zebra Kasete, Rossing GM corporate services, said Monday the uranium miner had s lashed its capital and expenditure plans, adding that the company’s cash flow wo u ld remain strained.
Rossing said its bottom line was being pummelled by plunging prices of commoditi es and the negative business confidence on the direction of the global market.
Kasete said in a statement that the Rossing’s life of mine extension plans requi red high mining activity levels for the next year and beyond, adding that in 200 9 , Rossing will intensify stripping in the open pit to expose the required ore, n e cessary but costly expenditures.
“Even though we have revised our capital and production plans, the company’s cas h flows independent of the financial crisis will continue to be strained,” Kaset e said, pointing out that “the financial crisis adds great uncertainty to this po s ition.”
Rossing’s parent company, Rio Tinto, Friday said it would cut overheads by slash ing jobs and spending at all its operations.
Market analysts speculate that Rio Tinto might dispose of non-core and non-profi t making assets.
Kasete said the Rossing is on course for its target output of 4,004 tonnes of ur anium oxide by end of 2009.
“Rossing is on track to record its targeted drummed uranium of 4,004 tonnes by y ear end,” Kasete said.
A Rossing on the brink is bad news for Namibia’s mining sector and the overall e conomy.
Namibia had pinned its hopes of economic growth in the booming uranium sector.
Three weeks ago, Namibia’s only copper miner, Weatherly International shut down two of its remaining mines, citing shrinking margins as the prices of copper bot t oms out.
Last Friday, Namdeb, a 50-50 diamond mining venture between the Namibian governm ent and De Beers said it was going to cut an unspecified number of jobs due to a slump in jewelry sales as a result of the global financial crisis and high stock levels by wholesalers.
Namdeb said shifts at some mines sites will be reduced to one-per day and most o perations won’t operate over the Christmas season.
“This will inevitably result in a reduction in the required number of employees. We will consult openly and fully with any affected employees,” Namdeb said.