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Rio Tinto and The Rossing South Controversy

A group of investors that includes Canadian mining entrepreneur Stephen Dattels is contesting Rio Tinto’s alleged attempt at garnering control of what Dattels has said “could easily wind up being the most valuable uranium deposit in the world.” The property is the Rossing South deposit in Namibia and is currently controlled by Extract Resources Ltd., a Perth-based company of which Kalahari Minerals PLC owns 40 per cent. Drill work on the property has confirmed it is a world-class resource.

Rio Tinto, along with the Iranian government and others, owns the neighbouring Rossing uranium mine. Last year, Rio bought stakes in Extract and Kalahari. The controversy over the Rossing South deposit came about when Rio tried to push a merger between Extract and Kalahari so that the mining giant could purportedly then buy enough shares in the newly formed company to gain control over the Rossing South deposit. Fears over Rio’s intentions killed the merger.

Now Rio is reportedly trying to convince shareholders of the two companies to support a joint venture that would allow Rio to operate Rossing South. What’s got Dattels and others so up in arms is the idea that Rio may be able to acquire control of the deposit without paying a premium for it. “Why should Rio Tinto be able to muscle the shareholders of Extract and Kalahari around to suit its own benefit? In my point of view there is a much better alternative, which is to have both companies sold to the highest bidder,” said Dattels.

NWT Uranium Corp., a shareholder in Kalahari Minerals, has recently announced it has broken off talks with Rio because the company had “concern with certain questionable acts by Rio management which were not in keeping with the spirit of the discussions.” Like Dattels, NWT managing director John Zorbas would prefer that the Rossing South deposit be sold through a “serious bid.”