Paladin to cut costs, lay off workers at Kayelekera Mine
Dual-listed Paladin Energy Limited,owners of Kayelekera Mine (KUM) in Karonga through its subsidiary Paladin Africa Limited, has announced a reduction in expenditure of $2 million [K780m] and further staff cuts at its Kayelekera Mine (KM) in Malawi largely due to depressed uranium prices on the global market.
The Australian Securities Exchange (ASX) and the Toronto Stock Exchange (TSX)-listed mining group said this in a statement released on Wednesday titled ‘Cost reduction and production optimisation’.
The mine, which laid off 138 workers at KM in January this year, said the move is expected to reduce the costs by 17 percent from $39.20 [K15 288] per pound achieved for the June 2013 quarter.
“This reduction, expected to be achieved in the June 2014 quarter, will come principally [90 percent] from the previously flagged initiative of grid power coming on line and the acid saving nano technology being integrated into the circuit,” said a statement signed by Paladin’s managing director and chief executive officer John Borshoff.
Further, he said KM cash costs are targeted to be reduced by 22 percent to approximately $30.60 [K11 934] per pound over the financial year [FY] 2014 and 2015 before the impact of inflation.
The company’s general manager for international affairs Greg Walker, in an interview on Wednesday, said unlike the employee retrenchment carried out at KM in January this year, the staff reduction announced will impact only expatriate employees and not Malawi national employees.
“These measures are made necessary by the continued depressed price for uranium oxide on world markets. The current spot price for uranium, more than two years after the Fukushima nuclear incident, remains at an eight-year low of $34-35 [K13 260 –K13 650] per pound,” he said.
“While we have reduced costs at Kayelekera over the past 12 months, that has not been sufficient to offset the decline in the uranium price, so Kayelekera continues to operate at a substantial loss,” added Walker.
In addition, exploration budgets have been cut by 50 percent, with activities suspended on all projects except essential work on the Michelin Project in Labrador, Canada and some necessary follow-up work on the Mount Isa Queensland project.
