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Rössing Uranium Mine: Surviving the times

The story of Rössing Uranium Mining is the story of Rio Tinto because it could have been challenging to realise what became Namibia’s most significant mining venture without funding and commitment.

Understanding Rössing ‘s story would also help to understand the Rio Tinto story. The following is from historical records sourced from the Rio Tinto archives.

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While the story of Rössing Uranium started in the Namib Desert, that of Rio Tinto originated in Spain. Rio Tinto means red river. The company got its name from the Riotinto River, whose water had turned red due to pollution from years of copper mining.

The Rio Tinto mines, in the province of Huelva in southern Spain, had produced large quantities of copper, on and off, since before Roman times, most recently under the ownership of the government of Spain.

In 1872, following a series of financial losses, the mines were offered for sale at a price equivalent to several million pounds sterling. The Spanish government was in a financial crisis and needed more cash or expertise to exploit the large reserves of cuprous pyrites at RTC.

Substantial investments were needed to introduce opencast mining and to build workshops, tramways, crushing and metallurgical plants, a railway from the mines to the seaport of Huelva, a shipping pier, and the many other works necessary to operate on a large scale.

The availability of the mines was brought to the attention of Matheson & Company, the London-based agent for the Far Eastern merchants Jardine Matheson, by Heinrich Doetsch of Sundheim & Doetsch, a general merchant of Huelva.

Doetsch had the foresight to see that if the Rio Tinto mines were developed to their full potential, his business eventually stood to gain from a large increase in trade.

A syndicate – Deutsche Bank, Matheson, Clark, Punchard and Company – proposed purchasing the Rio Tinto concession in 1873. Hugh Matheson, senior partner in Matheson & Company in London, led the syndicate that bought the mines for £3.7 million for nine years.

The new company was floated on the London Stock Exchange with an issued share capital of £2 million and debentures valued at £600,000. Hugh Matheson was appointed as the first chairman of the RTC, with Heinrich Doetsch as his deputy.

Searching the desert after WWII

The uranium story in Namibia is complete with the Louw family – Captain Peter Louw, his son Graham, Major McLaren and Mr Beechcroft.

The story started in the Namib Desert in 1928 when Namibia was under German control, known as South West Africa. There a group of geologists found traces of radium used to treat cancer. However, the geologists did not pursue it.

The Great Depression came in 1929, and Swakopmund, just like any other small town, was hit hard. The Germans who had settled in Swakopmund then were looking for something to survive on. So they remembered that some geologists had explored the Rössing Mountain and found traces of radium.

Since Captain Louw’s wife was a nurse, she knew about the uses of radium. This encouraged the community members to go up the Rössing Mountain, where they picked up some stones.

The community sent the stones collected to England for testing, and radioactivity was confirmed. The lab, however, said there was no commercial value in the samples.

Around that time, the Second World War started, and one of Captain Louw’s sons, John, left for active combat in Italy.

In 1945, the USA ended the second world war by using nuclear bombs on two Japanese cities – Hiroshima and Nagasaki. The use of nuclear brought a renewed interest in uranium.

John had studied industrial chemistry and was employed by a Cape Town petroleum company.

According to his account in 2012, John said he understood from the periodic table of elements that uranium belongs to the radium family. He also said he understood that radium’s presence could indicate uranium’s presence.

When he visited Swakopmund, John shared his thoughts with his father and drove to where the geologists found radium. Once at Rossing Mountain, the two searched for the small black stones.

“We would each take an area to either side of the vehicle and search for small black stones about the size of a hen’s egg. This we duly did, and when our canvas bags were full – some 20 stones in each – we returned to the vehicle to find out the truth with the aid of a Geiger counter,” John said.

John said they checked several stones without success until only five were left.

“Not a single chirp or beep from the Geiger counter. Only silence. Then we checked the second bag; again, deafening silence from the counter … until, about five stones from the bottom, the counter took off in wild excitement. That was the birth of Rössing Uranium Limited: one lonely black stone, not much bigger than a hen’s egg,” John said.

They marked where they had picked up the stones, and his brother Graham checked the location before pegging it off.

According to John, Graham later declared the area officially a mining claim.

In 1954, Captain Louw brought together Graham, Major McLaren and Mr Beechcroft to register G. P Louw Pty Ltd. Eventually, the company acquired the rights to 1 200 square miles.

With money, the company could work the mine. So, they approached big companies, including Anglo-American Corp, formed by Ernest Oppenheimer, that had interests in mining. It had taken over the diamond fields in Namibia under the Consolidated Diamond Mines.

In 1955, Anglo-American Corp took over the prospect for two years. By the end of 1956, after exploring the desert, Anglo-American Corp left, saying they had not found anything commercially viable.

Rio Tinto came on in 1966 and started to drill, evaluate and discover uranium ore. Mining began in the 70s and production in March 1975, marking the birth of Rossing Uranium Mine.

Rio Tinto took up 69%, the Iranian Foreign Investment Company 15%, and the South African Government Industrial Development Corporation 10%.

The UN sanctions and Rössing contracts

Two major world events impacted Rössing Uranium Mine. These pertained to the shareholding in the company and the offtake contracts signed in the 60′ and 70s.

The presence of the South African parastatal entity known as the Industrial Development Corporation (IDC) and the Atomic Energy Organisation of Iran (AEOI) haunted the Rossing Uranium mine over the years.

When Rossing started operations, the apartheid South African government illegally occupied South West Africa (Namibia). The United Nations terminated South Africa’s occupation of South West Africa in 1966 through the Security Council Resolution 435. The resolution meant South West Africa was under the United Nations Council for Namibia (UNCN). South Africa refused to withdraw its troops.

In 1973, the International Criminal Court of Justice upheld the United Nations’ ruling that the apartheid regime should withdraw its troops and hand over the country to the UNCN ahead of Swapo taking over.

Two years before Rossing started operations, the UNCN decreed that there should be no extraction of natural resources in Namibia without its permission. The decree warned that anyone found extracting and selling minerals from Namibia would be held liable.

Beneficiaries to Namibia’s minerals, including Britain and the United States, except Sweden, did not honour the decree when uranium production from Rossing would satisfy Britain’s 10% demand. This decree triggered heated debates on whether Rossing was a legitimate business in the eyes of the world.

Between 1975 and 1980, the UNCN conducted campaigns against Rossing Uranium’s operations and the sale of yellow cake. Some British activists formed the Campaign Against the Namibian Uranium Contracts organisation, which argued that buying uranium from Namibia was supporting illegal occupation of the southwest African country.

The Thames TV flighted a documentary titled Follow the Yellowcake Road about Rossing Uranium, and its major shareholders are the governments of Iran and South Africa.

The documentary concluded that since Britain had okayed the contracts, it compromised the United Nations’ bid to rid Namibia of the apartheid regime.

Despite all the discontent over Rossing, former British PM Margret Thatcher visited the mine in 1989 and declared it a proudly British company. A year later, Swapo was victorious, and Namibia became independent.

The shareholding structure changed. Rio Tinto owned 69%, the government of Iran retained its 15%, the IDC South Africa 10%, the Government of Namibia 3% and local individual shareholders 3%.

The Iranian shares in Rössing

Although the standoff between the US and Iran had been going on for some years after the 1979 Islamic Revolution, the issue of uranium enrichment took a different turn and involved Rossing.

Iran announced in 2003 that it was enriching uranium at Natanz into technology for peaceful purposes. The US said Iran was developing nuclear weapons. Iran then called the International Atomic Energy Agency to inspect the programme.

Germany, France and Britain agreed with Iran to stop enriching uranium. The International Atomic Energy Agency cleared Iran in 2004 but referred the case to the Security Council, which demanded Iran stop enriching uranium by August 2006. When Iran failed to comply, the UN imposed a two-month grace period and again, Iran did not comply. In March 2007, the Security Council passed Resolution 1747 against Iran and some Iranian officials and financial entities.

On 9 June 2010, the United Nations passed Resolution 1929 stating that Iran shall not acquire an interest in any commercial activity in another country that involves uranium mining, production or use of nuclear materials and technology.

Rio Tinto said it complied with the United Nations Resolution 1929 because Iran bought the shares in 1976. The company argued that the resolution does not prohibit Iran from retaining an existing interest in commercial uranium, provided it does not make any further investment, gain access to any nuclear technology through its investment or have any uranium product offtake rights.

“IFIC (Iranian Foreign Investment Company) has not made any further investment in Rössing Uranium Limited since UN Security Council Resolution 1929 was passed, nor does it have access to any nuclear technology through its investment, nor does it have any uranium product offtake rights.

“The Government of Iran, which acquired its 15 per cent stake in Rössing in 1975, does not gain access to any nuclear technology through its investment, and it has no uranium product offtake rights. It has also not received any dividend payments from Rössing for the past three years, as these have been frozen,” Rio Tinto said in a statement dated 4 November 2010.

Rio Tinto sells shares

On 26 November 2018, Rio Tinto announced that it was selling its shares to the China National Uranium Corporation (CNUC) for US$106,5m.

Rio Tinto said it was selling after assessing its strategic options and decided to focus on the core assets capable of yielding sector-leading returns.

CNUC agreed to pay US$6.5m as an initial cash payment and a contingent payment of up to $100m based on uranium spot prices together with the net income of Rössing Uranium during the next seven years. This deal was concluded in July 2019.

 

Source: The Extractor Magazine

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