THE Namibian Competition Commission has approved the N$1,5 billion Rössing Uranium mine acquisition by China National Uranium Corporation.
In a statement released yesterday, the commission said they had approved the acquisition with conditions for China National Uranium Corporation (CNUC) to acquire the entire issued share capital of Rio Tinto Overseas Holding Limited, thus gaining control of Rössing Uranium Limited (RUL).
The Namibian Competition Commission (NaCC) found that the transaction is unlikely to result in the prevention or substantial lessening of competition, or in any undertaking acquiring or strengthening a dominant position in the relevant market.
Rio Tinto last year announced their intention to sell their stake in Rössing to CNUC, indicating that the payment is linked to uranium spot prices and Rössing’s net income during the next seven years.
NaCC chief executive officer and secretary to the commission Vitalis Ndalikokule said the commission, however, found that the proposed merger gives rise to significant public interest concerns such as employment, the bundling of tenders for outsourced services, goods and/or products, transfer pricing, and dominance of the local uranium sector.
“In order to safeguard employment, local procurement and maintain benefits currently derived in terms of taxes and royalties, the commission imposed conditions to the transaction,” he stated.
Ndalikokule added that the conditions include that there be no retrenchments of Rössing employees for two years, as well as maintaining at least 95% of local employees until the mine reaches the end of its lifespan.
The mine is also expected to maintain a ratio of at least 95% local employees at management level.
Additionally, Ndalikokule said RUL may not employ non-Namibians at management level for more than a two-year fixed term contract, and “RUL shall not implement any changes to its 30 July 2013 procurement policy which will have the effect of providing less favourable terms to local suppliers, until the expiry of the lifespan of the mine. This is to benefit local SMEs for procurement of any services, goods or products below a value of N$250 000.”
Rössing shall furthermore procure a minimum 80% of any of the above services, goods or products from companies which are majority Namibian-owned and registered, and employ a minimum of 75% Namibians.
“RUL shall conduct all transactions with a connected person in accordance with the arm’s length principle, and furthermore in accordance with section 95A of the Income Tax Act, No. 24 of 1981,” Ndalikokule noted.
Rio Tinto chief executive officer Jean-Sébastien Jacques said: “The sale of our interest in Rössing once again demonstrates our commitment to strengthening our portfolio, and focussing on our core assets, which deliver sector-leading returns in the short, medium and long term. Rio Tinto will work closely with CNUC to ensure a smooth transition, and ongoing sustainable operations at Rössing.”
Rio Tinto owns 69% of the Rössing mine, while the Namibian government has a 3% stake, and the majority (51%) when it comes to voting rights. The Iranian Foreign Investment Company is a passive legacy investor in Rössing Uranium, holding a 15% stake that goes back to the early 1970s during the financing of the mine.
The Industrial Development Corporation of South Africa owns 10%, while local individual shareholders own a combined 3%.
Source: The Namibian