The spot prices for uranium have been continually declining and the market remains oversupplied.
Last month, the spot price fell to US$28/lb which impacts the company’s earnings by NAD300m ($28.3m) for the year, the company said.
As part of the restructuring, the company will cut 265 of the 1,168 jobs at the mine.
Rössing Uranium managing director Werner Duvenhage was quoted by Bloomberg as saying on a conference call that production at the mine will drop to slightly less than 2,000 tons this year compared with 2,409 tons in 2013.
"We have to keep company operating to avoid care and maintenance or complete closure," added Duvenhage.
As per the new operating model, Rössing will only produce sufficient quantities for the existing long term contracts.
The proposed plan, which will be implemented from 1 August 2014, will include a five-day operating cycle, three-panel shift pattern, revised mining and milling targets, among others.
Additionally, Rio Tinto will consider outsourcing and insourcing opportunities to further improve efficiency.
With this plan in place, the company will be able to reduce its fixed operating costs by NAD1bn ($94.4m).
Image: The pit of the Rössing mine near Swakopmund. Photo: courtesy of Ikiwaner.
