Uncertainty continues to stalk the local uranium sector, as prices remain depressed, reaching a 13-year low at the beginning of this month, when the mineral resource traded at around US$17,75 per pound.
According to the Chamber of Mines of Namibia, the persistent low uranium prices have brought uncertainty, in terms of the development of some projects in the sector.
“At this stage, it is difficult to predict when such projects will be developed, given current uncertainty, differing sentiments and outlooks regarding uranium price recovery,” Chamber of Mines of Namibia Chief Executive Officer, Veston Malango, told the Windhoek Observer.
The tough-talking chamber boss said delays will now be expected especially for those projects that were betting on the recovery of the uranium price, which collapsed after the Fukushima nuclear disaster in March 2011.
The management of Areva’s Trekkopje mine, which has been under care and maintenance since July 2013 at a cost of over N$100 million annually, said in an earlier interview that uranium prices should rise to at least US$60 per pound, before the company can reopen the mine.
“The development of these projects will be delayed indefinitely, due to the recent plummeting of the uranium price,” Malango said this week.
Uranium miner, Langer Heinrich, announced plans in October to cut production next year, citing weak global prices of the commodity, joining an earlier move in this regard by Rio Tinto-owned, Rössing Uranium, although no mention has been made of staff rationalisations to cut operational costs.
“In October this year, Paladin announced its lowering of production targets for the Langer Heinrich in 2017 and 2018 and has signed a non-binding term sheet to sell 24 percent of the mine. We also expect to see Rössing lower production in 2017,” Malango said.
He, however, remains positive about the outlook for local uranium production, noting an increase in the first half of the year.
“In terms of uranium output for 2016, we don’t expect to see any major reductions, as output levels in the first half of 2016 in fact increased by 14 percent,” Malango said.
According to Bank of Namibia (BoN) figures, the country’s uranium production rose by 23,4 percent to 3,549 tons during the first ten months of 2016.
Malango said production in the sector is expected to remain on an upward trend, citing the expected coming into production of the N$20 billion Swakop Uranium Husab Mine next year.
“Notwithstanding such developments, the net output for the uranium subsector should still be positive in 2017, as Swakop Uranium’s new Husab Mine is soon to come into production,” he said.
The mine is expected to produce 15 million tons of processed ore per annum, making Namibia the fourth biggest uranium producing nation in the world.
“The low uranium price will not impact the production targets at Husab, however, it will result in lower government revenues, through taxes and royalties, should we not see a significant recovery by the time they enter commercial production,” Malango said.
The mine, when it comes into production, is expected to contribute between 5 and 6 percent to total government income, pay between N$1,1 and N$1,7 billion per year in corporate tax and N$220 million per year in royalty payments, while contributing an additional N$7,3 billion or 20 percent to Namibian exports annually.
“Production from the Husab Mine will transpire as planned, which will contribute significantly to the domestic economy, once in full production, independent of the very low uranium price. There are also a number of other internal factors and challenges impacting on the performance of the domestic economy at present, not merely the depressed uranium price.”
With China seeking to reduce its dependence on polluting coal, the Asian giant plans to build 25 new nuclear power plants, in addition to its 26 reactors in operation, with almost 100 more planned by 2030, according to the World Nuclear Association, a move which could improve prices.
Nuclear power stations currently provide around 11 percent of the world's electricity supply, but the share is likely to increase, as China and India expand their capabilities.
India aims to generate 25 percent of its electricity from nuclear plants by 2050, up from 4 percent in 2013.