2011 A URANIUM YEAR FOR NAMIBIA: ANALYSTS
NAMIBIA could reap major financial rewards from the recent move by China and India to compete in the uranium market as the need for clean energy in the world continues to take centre- stage.
Recently most Asian countries have been on the drive for alternative clean energy with global energy analysts and consultants turning to uranium- which is essential in the creation of nuclear energy- as the answer to the growing need for clean energy sources.
Namibia is one of the world’s top uranium producers with different international players among them the French-based Areva, Rio Tinto owned Rossing Uranium, Langer Henrich Mine and the developing Rössing South Project producing most of the country’s uranium,
Namibia which is among the top three uranium producing countries along with Australia and Russia is tipped to enjoy the positive movements in the Uranium Spot Prize Index (USP) which has been on the upsurge after the global economic crisis.
Analysts in Namibia have pinned their hopes on uranium racking in the much needed millions to the Gross Domestic Product (GDP) following recent plans by Areva, the new player in the uranium mining sector to increase its track copier.
In an interview with Prime Focus, Bank Windhoek Chief Economist and renowned economic adviser, Dr. John Steytler notes that the country will see an increase in uranium production as most producers move in to fill the market space created by the emergence of India and China.
Steytler revealed that China has erected more than a hundred nuclear reactors in its quest for cleaner and affordable energy sources, a move he believes will spell a profitable and fruitful year for Namibian producers.
“The need for cleaner energy in the Southern Hemisphere and the recent movements in the Uranium Spot Price Index could be the driving factor. I really do not see the political crisis in Iran influencing the market because it is not much of a major player anyway,” says Steytler.
These revelations could cement recent budgetary and monitory authorities’ claim that mining continues to be the country’s surviving cash cow although they have also called for diversification.
Steytler adds that the favourable prize increase could see most uranium companies laying long term plans that would increase production in anticipation of profitability within the New Year.
He notes that the significant declines in the uranium sector in 2008 when the Global Economic Crisis gripped the market could soon be averted as the country has seen a sizeable number of companies doing exploration last year.
According to recent revelations, Areva, which opened a Sea Desalination plant last year in April, has capacity to produce about 3000 tones of uranium ore annually, while Rössing Uranium, which also has shares in the Rossing South, produces around 4500 tones of ore annually.
Namibia saw the Erongo Region experiencing a uranium rush in 2009 following the discovery of ore deposits in the coastal region prompting multinational mining firms to launch major investments in the country.
Steytler’s sentiments come at a time when the mining sector took a dip towards the end of 2010 as acknowledged by the Bank of Namibia in their last quarter bulletin for 2010 which covered activities from July 2010 to November 2010.
Bank of Namibia Governor, Ipumbu Shiimi, in his last quarter monetary policy statement of 2010 acknowledged that the mining sector would turn a curve in 2011 and would continue to contribute a significant chunk to the Government’s revenue pool.
“Generally proceedings in the mining sector are expected to improve in the forthcoming coming from a reasonably challenging year. This coupled with improvements in the secondary industry will improve the country’s earnings,” said Shiimi.
While acknowledging that diamonds were the major foreign currency earner contributing the bulk of the 10% to the GDP from the mining sector, Steytler acknowledges that uranium would see a better year in 2011.
“Obviously some of these companies in the mining sector plan with a long term out-look and they might be looking forward to a favourable year in 2011 as the market has been promising,” he says.
He also adds that although the Namibian dollar continues to firm against major trading currencies, its effects on uranium exporters’ pockets will be minimal.
According to the world uranium price monitoring index- the Index Mundi- Commodity Price for uranium on a month to month scale shot from around US$ 40,75 (approximately N$280 per pound) in June 2010 to US$60 (approximately N$420 in December 2010).
Steytler also counts out major effects from the up-down surge that characterised both the Global Uranium Price and the USP index last year and expresses confidence that the expanding market base is good enough to sustain continued rewards for the country in 2011.
During the peak of the global economic downturn the country’s largest uranium producer Rössing took a knock shedding off hundreds of millions in its government royalty declaration which fell from above a billion to around N$900 million.
Steytler is upbeat about the better days in the Namibia uranium mining industry this year although he has not certain of the ongoing European debt crisis which has somehow created uncertainty in the traditional European markets. PF