Modern Mining February 2019

COMMENT

Will Namibia benefit from a better uranium price?

I must say I was surprised to read re- cently that uranium was one of the top performing commodities in 2018, with the spot price increasing from around US$21/lb at the beginning of the year to US$28,50/lb at the end. An interesting ques- tion to ask is what this means for Namibia, which is the only significant uranium produc- er in the Southern African region. As many readers will recall, 10 to 15 years ago Namibia was experiencing a uranium boom, occasioned by the fact that the ura- nium price was going through the roof, hitting an incredible high of US$136/lb in 2007. An almost endless number of projects seemed to be in development in Namibia’s uranium ‘belt’ to the east of Swakopmund, many of them owned by Canadian and Australian mining juniors but with major companies such as France’s Areva (now rebranded as Orano) also participating in the race to get new mines into production. When the boom started, Namibia only had one producing uranium mine. This was Rössing, which was commissioned in 1976 and which is still running today although its major- ity owner, Rio Tinto, is in the process of selling its 68,62 % stake to China National Uranium Corporation (CNUC). It ranks as the longest- running open-pit uranium mine in the world and has reputedly produced more uranium than any other uranium mine globally. Remarkably, it recently reported a good performance in 2018 with production increasing by 17 % over 2017. Rössing was joined by Paladin’s Langer Heinrich mine in late 2006. Expanded several times to increase its annual capacity to around 5 Mlb of U 3 O 8 , it was placed on care and main- tenance in August last year due to the sustained low uranium price. Paladin has more recently reported that it has embarked on a concept study (to be followed by a PFS) to optimise the mine in preparation for a restart decision if and when the uranium price improves. Another mine that was partially commis- sioned was Trekkopje, owned by Orano, which went into a pilot phase of operation (the ‘Mini’ project) in 2009 which was followed by a sec- ond phase (the ‘Midi’ project). Phase 3, the full production phase designed to produce 3 000 t/a, never materialised and the mine was mothballed in 2013. One mine developed during this period, however, has gone right through to production. This is Husab (which was originally known as the Rössing South project). Husab was acquired by China Guandong Nuclear Power Corporation

(CGN) from the original developer, Extract Resources, in 2012 for a mammoth US$2,4 bil- lion. The mine went into construction in 2013 and the first uranium oxide was drummed at the end of 2016. Swakop Uranium, the in-country operator of the mine, is not particularly forthcoming with information on the mine’s performance but the ramp-up has apparently been somewhat slower than expected. According to a recent report in ‘The Namibian’, however, the mine is aiming to produce 5 000 tonnes of U 3 O 8 in 2019. This is huge but is nevertheless below the mine’s design capacity of 6 500 t/a. So to sum up, the current state of uranium mining in Namibia is that there are two mines in production, a couple of operations on care and maintenance, and several advanced proj- ects waiting in the wings, with probably the pick of them being Bannerman’s Etango project, which has a completed Definitive Feasibility Study (DFS) in place. According to the study, Etango has the capacity to produce 7,2 Mlb (approximately 3 265 tonnes) of uranium oxide a year over its life. The only problem is that average life-of-mine cash operating cost would be US$38/lb U 3 O 8 , which is way above the cur- rent spot price. Overall, Namibia’s uranium mining indus- try is not a total disaster, thanks mainly to Chinese investment, but it could be a whole lot better if the upward move in the price we’ve seen in recent months were to continue. What are the chances of this happening? As far as I can make out, there is very little consensus on this and even the recently released 27th edition of ‘Uranium – Resources, Production and Demand’ (also known as the ‘Red Book’), which is prepared by the Nuclear Energy Agency (NEA) and the International Atomic Energy Agency (IAEA), provides little guidance (despite running to over 400 pages). Also worth pointing out is that while a moderate increase in the uranium price would ease the pressures on operating mines it would probably not be sufficient to lead to a renewed phase of mine development. Indeed, some industry insiders believe that current prices would have to more than double to make new mine construction viable. An increase of this magnitude seems highly unlikely in the short to medium term so my guess is that most of the current projects in the pipeline in Namibia will have to wait a few more years yet before being developed. Arthur Tassell

Rössing recently reported a good performance in 2018 with production increasing by 17 % over 2017, a result of higher milling grades.

February 2019  MODERN MINING  3