Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
NIAMEY/PARIS, Oct 11 (Reuters) – French uranium mining and nuclear fuel group Areva NewCo will slash output and reduce staffing levels at its Niger mines in response to low uranium prices, the company and its unions said.
A spokeswoman for Areva’s open-pit Somair mine close to Arlit said the mine will reduce its annual production of uranium concentrate to 1,700 tonnes in 2018 from 2,100 tonnes this year.
“Market conditions are very difficult … Somair has to adapt its industrial organization and its workforce accordingly. It is a question of survival,” she said.
An official for the Niger-based Synamimes union told Reuters that Somair’s managing director had told staff that 190 jobs would be eliminated there and a freeze would be placed on contracts for 500 contractors.
Areva confirmed that there would be “a reorganization and adjustment of the workforce of Somair and sub-contractors” but declined further comment.
Areva said it was also continuing to study various scenarios for its underground Cominak mine. Areva NewCo holds a 63.6 percent stake in Somair and is the largest stakeholder in nearby Cominak, with 34 percent.
“The managing director (of Cominak) told us there would be severe restrictions, without giving details,” Amadou Miou, the head of the Arlit section of the Synamines union, told Reuters.
He said the union would study the companies’ decisions.
Before the Fukushima nuclear disaster in 2011, uranium traded above $70 per pound but the reactor fuel has been on a downward trend ever since and now trades at around $20, well below the level at which most mines can operate profitably.
Other uranium mining companies such as Canada’s Cameco are also slashing production and cutting jobs.
Areva NewCo was split off from state-owned integrated nuclear group Areva this year after its parent company’s equity was wiped out following years of losses.
The French state recapitalised NewCo with a 2.5 billion euro capital increase in July, while Japan’s MHI and JNFL also plan to put in 500 million euros.
The company plans to change its name early next year.
(Reporting by Boureima Balima in Niamey and Geert De Clercq in Paris; Writing by Joe Bavier and Geert De Clercq; Editing by Alexander Smith)
