June 9 (Bloomberg) -- Rio Tinto Group will cut the workforce at its Rossing uranium site in Namibia by 23 percent as the world’s second-largest mining company responds to weaker demand for the metal used to fuel nuclear power plants.
Production will fall to “slightly less” than 2,000 metric tons in 2014 from 2,409 metric tons in 2013, Rossing Uranium Ltd. Managing Director Werner Duvenhage said on a conference call today. It will cut 265 of the 1,168 positions at the mine.
Rossing’s operations are suffering from lower grades and a slump in global demand for nuclear fuel following Japan’s Fukushima reactor disaster in 2011. Namibia is the largest uranium producer after Kazakhstan, Canada and Australia. The cost-reduction measures will save as much as 1 billion Namibian dollars ($94 million), Duvenhage said.
“We have to keep company operating to avoid care and maintenance or complete closure,” he said. Starting next month, Rossing will reduce its operating cycle to five days a week from seven.
Rossing will maintain production levels that will enable the company to satisfy long-term sales contracts, Duvenhage said. “We are significantly downgrading production targets.”
It’s not the first time Rossing has reduced its workforce. It fired 276 workers in 2012 in response to weaker uranium prices. In March 2011, an earthquake and tsunami crippled Tokyo Electric Power Co.’s Fukushima nuclear power plant, a disaster that led to Japan suspending its fleet of reactors.
Rossing plans to “ramp up production after 2017” and will likely return to full output in 2018 and 2019, Duvenhage said. “We have to undertake these measures to reposition the operation for the future as we still believe strongly in the future of uranium,” he said.
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