|Rössing Uranium in 2006 Message - MD Uranium Market Sustainable Development|
|Rössing the business Rössing in the community2006 Performance|
Mining & Processing Uranium
Based on the sharp increase of the uranium market price and after detailed feasibility studies had been completed, Rössing Uranium’s Board of Directors took a decision to invest US$112 million (about N$750 million) in extending the mine’s life until 2016. Preparations for the Life-of-Mine Extension Project started in 2006 and investment will continue during 2007 to acquire new mining equipment and to refurbish parts of the Processing Plant.
Mining of ore and waste
“The arrival of new operators and maintenance personnel at the mine makes one aware that Rössing Uranium is returning to full production. Many people have suggested that it must be much easier to mine now, than when the mine was on a path to closure.
The year under review was an exciting one for the Mining Department. Amongst other equipment, the mine received a new loading shovel, four 200-tonne haul trucks, two rock-drilling machines, two track dozers, and a tyre dozer. The number of equipment operators was increased in parallel.
In order to prepare for the extension to 2016, mining of 6 million tonnes of unmineralised waste rock continued at Trolley 10 on the south-east side of the open pit to expose deeper-lying ore to be ready for mining from 2007 onwards. At the same time, the mining contractor Basil Read Civils Namibia (Pty) Ltd joined the operation to assist Rössing with mining to prepare for the Phase 2 extension in the north-west of the open pit. This area, known as the Pioneering Area, calls for special mining techniques using less bulky equipment that can remove inaccessible and steep hills before Rössing’s heavier-duty machinery can take over with large-scale mining of the flattened areas. In 2006, 6.6 million tonnes of waste were removed from the Pioneering Area, and it is anticipated that the ore will be reached during the second quarter of 2007.
Although the business focuses on expansion and growth, Rössing’s foundation is to ensure continued uranium production in order to satisfy long-term uranium supply contracts with our global customers. Thus, while waste stripping was embarked upon around the edges of the open pit, ore mining concentrated in the eastern sections of the pit. The waste rock removed increased from 7.5 million tonnes in 2005 to 16.8 million tonnes in 2006, while 12.0 million tonnes of ore were processed. In 2006, 94 tonnes less uranium oxide were produced, compared with the 2005 production year. This was mainly attributed to the drop in grade.
In the mining area, a number of challenges had to be overcome. As the pit has significantly deepened and narrowed in the last few years, hauling ore up to ground level took longer; consequently, less material was produced in similar time spans. Manoeuvring haul trucks with large turning circles became more difficult the narrower the pit bottom gets. Also, more water than before was found in blast holes at the lowest mining bench, making blasting increasingly difficult.
In 2007, two additional shovels, seven haul trucks, a tyre dozer and a rock hammer are expected to arrive at the mine. Some 90 new operators need to be trained, while 140 employees need to be routinely retrained to ensure safe and effective production.
“We are passionate about extracting and recovering uranium in a manner that:
The Processing Department is responsible for extracting the uranium from the mined rock, producing uranium oxide, and securely packing and shipping the product to converters overseas for further processing.
In the Processing Plant, for example, the Life-of-Mine Extension Project includes upgrading the outdated electrical systems over the next four to five years, upgrading the systems that prevent expensive resins going to waste, and upgrading the dust extraction systems to reduce air emissions of silica-bearing and radioactive dust.
During 2007, work will continue on testing the feasibility of an ore-sorting pilot plant, which aims to make the sorting of waste rock from uranium-bearing rock more efficient by using radiation-scanning techniques.
The highlight for the Processing Department in 2006 was the sustained increase in the throughput rate of ore through the 30-year-old Processing Plant. The target set for 2006 was to produce 11 tonnes of uranium oxide per day. This target was achieved for three consecutive months due to good teamwork between the metallurgists, operators, maintenance personnel, and the MUN, and due to the continued training of employees. At the same time, the number of injuries in the Department fell from 2005 to 2006.
As Namibia has a shortage of professionals in many mining-related fields, including metallurgical engineering, the mine substantially supports employee training. In keeping with this philosophy, training is recognised as an essential function in the Processing Department. During 2006, two of the Department’s employees were granted bursaries. In 2007, the number of bursaries will increase to three in the engineering field and five for process technicians, while six employees will be placed on Rössing’s Supervisory Development Programme.
The Processing Plant and the associated tailings disposal operations are the biggest consumers of water at the mine. Tailings are the remaining crushed and milled ore rock from which uranium has been extracted. The tailings are pumped as a mixture of sands, fines and water to the tailing facility, where water that does not evaporate is recovered by recycling. The higher throughput rates as well as a higher fines proportion of tailings led to higher-than-planned water consumption during 2006.
In 2006, Rössing mine used 3.31 million m3 of fresh water compared with a planned demand of 3.06 million m3. The additional input of 0.25 million m3 was necessary due to a shortage of recycled water during times of higher uranium production. Actions to complete the upgrading of the tailings solution return system were delayed. The water that could not be recycled immediately was stored within the tailings facility for later use and did not affect the environment.
Annually between 60% to 70% of fresh water used is recycled.
Rio Tinto operations worldwide are expected to achieve a 10% reduction in water use between 2003 and 2008. (Five year targets were set in 2003.) Rössing’s contribution to this effort is a 19% reduction in freshwater consumption per tonne of uranium oxide produced. The target was reached in 2004 and 2005, but the water use of 916 m3 per tonne of product in 2006 was higher than the target of 839m3 per tonne. New water saving initiatives are planned so that the target can be met consistently by 2008.
The freshwater consumption target for 2007 is 3.12 million m3.
“One of the achievements in 2006 was the successful reduction of the traditional two-week shutdown to one week, thereby reducing plant downtime.”
An important initiative in 2005 was the motivation and preparation of engineering personnel to move into jobs with higher responsibility through a programme of exposing them to a wide range of tasks. While the format of this development programme was concluded in 2005, maintenance personnel in the department participated in this programme during 2006. During 2007 these development programmes will be consolidated.
One of the major challenges during the year under review was the high turnover rate of engineering personnel. More than 50 people had to be recruited to maintain the necessary staff levels. Among those recruited were apprentices who were trained by NIMT and who had done their on-the-job practical job attachments at Rössing.
On the contractor side, the workload increased during 2006 due to the Life-of-Mine Extension Project. With the planned integration of contractors into the Rössing business solution system, embedding new work management processes continued to be the vital area of focus during the year. This included HSE training, planning, workmanship, quality assurance, quality control and work execution.
Larger contracting projects during 2006 were the hiring of cranes, the hiring of Basil Read Civils Namibia (Pty) Ltd as a mining contractor, and other earthmoving contracts.
During 2007, asset management processes will be implemented with the assistance of Rio Tinto‘s Operational and Technical Excellence (OTX) team, under the framework of the Improving Performance Together initiative.
Planning and technical services
“One of the Department’s achievements was the recruitment of female Namibian geologists and mining engineers, predominantly from the University of Namibia. We are bearing the fruit of this initiative because graduate geologists are now taking on more responsible roles and new challenges. However, we are still faced by a shortage of skilled staff, especially experienced mining engineers and geologists.”
The Planning and Technical Services Department needs to provide practical plans and technical support to enable operational areas to produce at their required levels. The key challenge to extend the life of the mine beyond 2016 has always been understanding the ore body and estimating resources and reserves as accurately as possible. Much effort was expended in 2006 to review past exploration results, while the focus in 2007 is to develop production plans that will deliver value to the company. It is essential that the production plans provide the leverage to achieve the target of more than 4,000 tonnes U3O8 processed by year end. A second key area is to optimise and maximise the current open pit, and ensure that the mine produces U3O8 beyond 2020.
As the pit narrows and Phase 1 ore becomes virtually depleted, the challenge is to advance the Trolley 10 area as quickly as possible to expose the ore. Trolley 10 will be the key supply area whilst Phase 2 in the north-west of the pit is being exposed for ore. Presently, the high-grade ore is still unexposed up in the Trolley 10 area. It will be challenging to provide high-grade ore to the Processing Plant until Trolley 10 has been exposed.
In 2007, ongoing exploration work in the SH and SK areas will also be challenging as the objective is to drill as quickly as possible and determine the value of these ore bodies.
“A major challenge for the Finance Department in 2007 would be its input into the implementation of the Rio Tinto Business Solution to replace our current business information system. The programme known as “Aligning Business Systems” is about building common ways of working and having a single business system across Rio Tinto operations. This business solution has already been implemented at a number of Rio Tinto’s businesses and Rössing will be one of the business units to implement the programme in September 2007.”
Selling under longer-term contracts negotiated during the last two years when uranium prices had already increased, combined with a favourable exchange rate of N$6.77 to US$1, allowed Rössing to declare a profit during 2006.
In 2006, N$158 million was paid to the Receiver of Revenue in the form of companies tax – the first year since 2003 that Rössing did not find itself in a tax loss situation.
Salaries and benefits to employees amounted to N$245.6 million, of which N$54.3 million was paid to the Receiver of Revenue as employee tax.
“Rössing’s new Value Planning Department is all about helping management make the right decisions. There are so many opportunities facing Rössing at the moment, but with a scarcity of resources and with the expectation that the high uranium prices can’t be maintained over long periods, the challenge is to quickly prioritise and rigorously evaluate these projects to ensure the best investment decisions are taken.”
A new department was added to Rössing in 2006. Whereas the focus since 2000 had been to cut costs wherever possible, the mine could now afford to take a new approach of prudent investment to convert Rössing into a financially more viable business.
The focus is now on a value-based decision-making process in prioritising scarce resources and evaluating projects that require capital expenditure for implementation. This called for a shift in mindset from an operation about to close, to one which is planning for expansion and where a department such as Value Planning is required to ensure maximum return on investment is realised.
“Rössing wants to expand its production in a growing market. This means that the production capacity has to grow. 2007 will be a very interesting and important growth phase for Rössing. Business Development is the group that is doing the important development work to support the growth actions to successfully and on time develop new production capacity.”
At a time of significant expansion opportunities for Rössing, the Business Development Department focused on expanding on-site exploration for uranium deposits outside the current ore body and on developing mining and processing alternatives for new ore bodies.
Work started in 2006 to investigate further opportunities for Rössing to grow its production capacity with a mine life envisaged beyond 2020.
After preliminary exploration work having been carried out by Rio Tinto South Africa at Rössing in 2005, Rössing began exploration drilling to investigate promising uranium occurrences found in the mining licence area. This work will continue until 2008, when approximately
Rössing’s business partners
”Significant efforts have been made to illustrate Rössing’s support for local suppliers and communities. This same effort will continue, but with greater focus on BEE.”
“I think they support local businesses very well. Apart from being the Cummins engine agent and supporting them in that, we also look after their power-generating engines on site, as well as many of their smaller engines. We have two people on site constantly, but theSre are many smaller contractors in town that are completely dependent on Rössing, so I believe they do support local suppliers.”
“All business people felt it tremendously when Rössing retrenched many of its staff members about ten years ago. But since then, things have improved. We as a company have submitted several tenders to Rössing over the past few months. We haven’t heard of any decisions yet, but it is encouraging to see that Rössing asks local suppliers to tender as well.”
The potential of Namibian companies is often underestimated. Construction contracts are sometimes being awarded to South African firms without considering the available expertise of local companies and the possibility of joint ventures in awarding larger size contracts.
Rössing is aiming to become the best corporate citizen in Namibia. In the past the mine has and will in future contribute to the nation economically and by supporting social development.
In June 2006, Rio Tinto introduced a policy “The way we buy”, which is a statement of business practices relating to the procurement of goods and services for Rio Tinto Group companies.
At Rössing, the procurement of goods and services makes up a substantial part of annual operating costs, and this can greatly benefit the Erongo Region and the country as a whole as money is spent with local, regional and national suppliers of goods and services.
In the year under review, payments for goods and services bought in Namibia amounted to 60% of money spent, which amounted to N$948.8 million. Goods and services purchased outside Namibia amounted to 40% of expenditure.
However, by understanding the economic interaction with the communities in which the mine operates, the mine can maximise benefits for the business and the community through increased support for local suppliers.
The mine is linked up with Rio Tinto Procurement (RTP), which manages the Group’s procurement processes and standards. RTP is run from South Africa and works closely with Rössing staff to implement the mine’s strategies as regards local suppliers.