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 
------- 
 
¶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