SYDNEY -- Global mining behemoth Rio Tinto will sell its stake in a uranium mine in Namibia to a Chinese state-owned player for up to $106.5 million in the latest move to focus on such resources as iron ore and aluminum.
Rio Tinto said on Nov. 26 that it has agreed to sell a 68.62% interest in Rossing Uranium, the owner of the Rossing mine, to China National Uranium Corp., a unit of China National Nuclear Corp. The transaction is slated to complete in the first half of 2019, following approval from the Namibian government. The sale price will be linked to such factors as uranium spot prices.
Rio Tinto has held the stake since the 1960s, when development on the mine began. Output there accounts for 48% of the company's total production of uranium, an element used as fuel for nuclear power generation. The remainder is produced by subsidiary Energy Resources of Australia. Rio Tinto has said it will dispose of Energy Resources' existing reserve, with no apparent plans for new development. This means that the group could exit from the money-losing uranium business altogether.
Rio Tinto is the world's seventh-largest uranium producer, accounting for 4% of the global tally, according to the World Nuclear Association. The company's uranium business incurred a loss of $26 million in 2017 on revenue of $417 million -- about 1% of consolidated revenue.
Global demand for uranium is forecast to "grow over the next decade or so on increasing appetites in China, India and elsewhere," predicted Tatsufumi Okoshi, a senior economist at Nomura Securities. "But growth may slow afterward, depending on the policies of those countries," Okoshi said.
In March, Rio Tinto became the first resources giant to withdraw from the mining of coal, the fuel that is the primary culprit of global warming.