The Australian Financial Review PRINT EDITION: 08 Feb 2012 Resources Daily Luke Forrestal Cap Town
Rio Tinto energy chief executive Doug Ritchie has for the first time openly stated the company's desire to partner in the development of the giant Husab uranium deposit in Namibia.
Husab is owned by Perth-based Extract Resources, which is expecting a $2.2 billion follow-on takeover bid from China Guangdong Nuclear Power Corp after the Chinese company secured control of almost 90 per cent of its 43 per cent shareholder, Kalahari Minerals.
Rio owns the Rossing uranium mine, which neighbours Husab (or Rossing South as it is otherwise known) and is the largest open cut uranium mine in the world.
The mining giant was a shareholder in Kalahari before accepting into the CGNPC bid and is the second largest shareholder in Extract with a 14.2 per cent stake.
Speaking to ResourcesDaily at the Mining Indaba 2012 conference in Cape Town on Tuesday, Mr Ritchie reiterated Rio's position that it would wait for a recommendation from Extract directors before deciding whether to accept the CGNPC bid.
He confirmed that the company was interested in a joint development of Husab regardless of which company ended up owning it.
"I think we've said consistently that the most efficient and beneficial [way forward] for all of the stakeholders - government as well as shareholders - is a joint development of Rossing South and Rossing and I don't think that there's anything about the industrial logic that's changed.
"In fact, I would say that conditions in the uranium market say that you find your economies wherever you can." Asked if Rio would prefer to be the operator of a mine at Husab, Mr Ritchie said it would make sense.
"There's lots of ways of how you can put these two assets [Rossing and Husab] together," he said. "But one's got an existing infrastructure, workshops, a plant and the other's just a deposit at the moment."
As CGNPC, which is state-owned, is a nuclear power company and not a miner, there is strong speculation it would be happy to cede operational control of Husab to a group like Rio.
Under terms imposed by the Australian Securities and Investments Commission, CGNPC has until March 1 to make an $8.65-a-share takeover offer for Extract.
Extract said earlier this week that it continued to investigate whether there were any available alternatives that could maximise value for shareholders.
The company's London-based managing director, Jonathan Leslie, presented at Indaba on Tuesday, but declined to go into detail about the CGNPC bid.
Mr Ritchie said Rio was actively looking to grow its energy asset base. He said there was no preference for uranium over coal, or vice versa.
"I'm a bit agnostic in terms of what I would rather be in. We've got a huge amount of expansion capability, whether it's in Mozambique or the Australian coalfields, inherent in the system "We've just made an acquisition in uranium and we've very positive about uranium in the medium to long-term.
"I'm quite happy with the mix that we've got and the way in which it will evolve.
Rio paid $C654 million for Canadian uranium explorer Hathor Exploration in November, trumping a rival bid by Cameco.
In April the company paid $4 billion for Riversdale Mining, giving it a large position in Mozambique's Moatize Basin.
The Riversdale tenements contain mostly coking coal, which is used in steelmaking. But there is some thermal coal present.
Rio reports its full-year financial results on Thursday.
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