Uranium boom a boost for Namibian projects
The recent surge in the uranium price is expected to boost several Namibian projects that have been put on ice.
By Tomas Aipanda and Festus Nampweya for the Chamber of Mines of Namibia (this article was first published by the Chamber of Mines of Namibia
Uranium prices had remained low for more than a decade, following Japan’s Fukushima Daiichi nuclear power plant accident in 2011, which sparked a sharp decline in the demand for nuclear energy. However, over the past few months we have witnessed a rapid turn of fortunes in the price of uranium over a short period of time. Uranium is currently trading at USD50/lb, which is a 170% increase in less than 36 months. So, what is driving this price increase, and what does it mean for our country?
What is Driving the Uranium Surge
The uranium spot price increase has been driven by institutional investors, most notably Sprott Physical Uranium Trust (SPUT). SPUT is a closed-ended trust created to invest and hold all its assets in physical uranium. SPUT, the world’s largest physical uranium fund, has been on a buying spree since it was launched in July 2021. It reportedly holds 50.4 million pounds of U3O8 as of March 2022, and this quantity has risen 13.8% from February figures.
Due to the ongoing crisis between Russia and Ukraine, there is widespread panic in Western Europe for security of energy supply. Europe relies heavily on gas supply from Russia, and because of this market disruption countries are now scrambling for alternative energy sources. Capacity limitations for renewables, combined with mounting pressure to reduce carbon emissions from fossil fuels, has put nuclear energy back in the race for clean energy.
Unbeknown to many, Namibia was the second largest uranium producer in 2021, superseded only by Kazakhstan. Russia and Ukraine follow closely and are also among the top 10 world’s leading uranium producers. The rising instability in the eastern region has exerted additional pressure on uranium supply, thereby accelerating further price increase.
Whether these prices can be sustained remains a debate, but the following should be considered in demystifying the role of uranium.
- Nuclear energy still has the highest energy capacity factor of 92.5%, followed only by geothermal energy at 74.3%, while solar energy has the lowest capacity factor at 24.9%. This makes nuclear energy the most viable, carbon free, base load globally.
- Nuclear fission does not produce any carbon emissions during power generation while coal produces carbon dioxide. Additionally, for each kilogram of uranium, 20 000kg of coal would be required to produce the equivalent amount of energy. This is relevant as the world and Namibia gears towards clean and carbon neutral energy.
- Radioactive waste is negligible in comparison to the enormous amount of energy produced. Assuming Namibia’s demand stands at 600MW, an equivalent size nuclear plant would only produce 15 tonnes of High Level radioactive Waste (HLW), whilst an equivalent coal plant will produce six million tonnes of carbon dioxide.
- Analysis of the Levelised Cost of Electricity (LCOE) shows significant variability when it comes to the cost comparison of solar or nuclear generated electricity. The costs differ depending on the entity or institution doing the estimation. The International Energy Agency (IEA), Intergovernmental Panel on Climate Change (IPCC) & National Environment Agency (NEA) closely estimate the cost to be about USD88/MWh for solar and USD63/MWh for nuclear. These figures indicate that nuclear energy is still competitive when compared to solar.
The World Nuclear Organisation reports that roughly 440 nuclear power reactors with a combined capacity of approximately 390 Gigawatts are now operational in 32 nations, with an additional 55 reactors are under development in 19 countries.
What Does This Price Increase Mean for Namibia?
Namibia is the second largest producer of uranium and holds the seventh largest resources of uranium. Rössing Uranium and Swakop Uranium are the main producers in Namibia and have accounted for 6784 tonnes of uranium production in 2021.
A 200% increase in spot price means mining companies can gain increased revenue and government can collect increased royalties. Although most Namibian mines hedge their uranium production through long term supply contracts with fixed prices, there is a clear benefit and opportunity to sell surplus production at spot price.
Namibia currently has two uranium mines that have closed or placed on care and maintenance due to the previously low uranium prices. In addition, three other uranium projects have halted exploration and feasibility studies due to the fall of uranium prices between 2011-2019.
Increased demand for uranium, coupled with rising uranium prices, would undoubtedly motivate Namibian miners to reopen mines that have otherwise been placed on care and maintenance. These mines can close a 40-million-pound production gap between present mine output and utility demand. Increased uranium spot prices will also drive additional investment in uranium exploration to identify additional production potential in the vast resource base in the Erongo region.
Potential Mines and Their Impact
Langer Heinrich Uranium was placed on care and maintenance in 2018 due to the low uranium prices. At its peak, Langer Heinrich employed around 500 permanent employees and produced 2000 tonnes of uranium per annum. Due to improved uranium prices, Paladin Energy has now secured funding to restart Langer Heinrich by 2023, with a life of mine of 17 years.
Bannerman Resources’ Etango project could potentially become the second biggest uranium mine after Swakop Uranium due to its large shallow resource base. Bannerman will complete the bankable feasibility of its scaled down Etango-8 project in September 2022 and could signal the construction and start of the mine.
Norasa’s Valencia mine completed a definitive feasibility study in 2015 and has enabled declaration of proven and probable reserves that can sustain a 11 Mt/ year processing plant and a 15-year life of mine. Norasa is seeking strategic partners to develop this project which should be eminent given the current uranium prices.
Deep Yellow’s Reptile project at its Tumas and Tubas deposits are still largely at exploration phase apart from the Tumas Deposit that was approved to proceed to definitive feasibility study. Tumas is estimated to have a life of mine of 11 years to exploit its 104 Mlb uranium resource base.
The above projects all have the potential to transform the entire Erongo region into an industrial hub. In the same light, they have the potential to jump start the economy with much needed jobs in the shortest time.
These projects combined have the capacity to absorb at least 3000 jobs within the next three years should the current uranium prices be maintained. The infrastructure and skills in Namibia are fully developed for all the projects to be constructed, developed and operated by Namibians.
What Should be Done?
With this much potential to be developed in the uranium subsector, it is imperative that policy makers take an intentional and proactive position to actively advocate for uranium at all relevant local and international platforms. Uranium has long been neglected despite its relevance in a carbon free or green energy future. Green hydrogen has been exclusively singled out as a national strategy on energy transition, but the conversation should be expanded to include the exploitation of uranium which is a significant clean energy source.
Namibia stands to benefit greatly from the eminent uranium boom and thus must be clear and unequivocal in its quest to promote Namibia as a preferred source and producer of uranium. Policy should be adopted to fast track the exploitation of these resources so as to attract foreign direct investment and create much needed jobs in the mining industry.
About the Authors:
Tomas Aipanda is a mining engineer with over eleven years’ industry experience. He works for Swakop Uranium Mine and has a keen interest in Mineral Policy.
Festus Nampweya is a mining engineer with a profound interest in energy and mineral economics. He also works for Swakop Uranium Mine.
They are both members of SAIMM (South African Institute of Mining and Metallurgy) and ECN (Engineering Council of Namibia) They can be contacted on email@example.com / firstname.lastname@example.org or 0813209004 / 0818671729
The article was first used in the Chamber of Mines of Mines of Namibia’s newsletter https://chamberofmines.org.na/blog-post/rise-of-uranium-and-potential-for-namibian-economy/ and is published by WhyAfrica courtesy of the Chamber of Mines of Namibia
WhyAfrica provides you with business intelligence that matters. WhyAfrica specialises in African affairs and natural resources. Africa is our business, and we want it to be yours too. To subscribe to WhyAfrica’s free newsletter or digital magazine, and for more news on Africa, visit the website at www.whyafrica.co.za or send a direct message. WhyAfrica launched its first ever digital magazine in November 2021. The company will undertake a road trip through South Africa, Namibia, Zambia, Zimbabwe and Botswana in June and July 2022. If you are interested in sponsorship or advertising opportunities, please contact me at email@example.com. We have a wide range of different packages and combo deals to give your company the greatest exposure to a rapidly growing, African readership.
The Road trip issue of WhyAfrica’s magazine is now available in print. The magazine will be distributed in South Africa, Namibia, Zambia, Zimbabwe, and Botswana during WhyAfrica’s Southern Africa Overland Road Trip, the company’s new and innovative platform. WhyAfrica has expanded its product range and now offers its readers, followers, advertisers, subscribers and partners the following:
- Daily 24/7 online articles on WhyAfrica’s website (FREE)
- Daily updates on WhyAfrica’s social media platforms (FREE)
- Newsletters delivered to a handpicked audience every two weeks (FREE)
- Two printed magazine per year distributed at large events and during our road trips across Africa featuring original, in-depth articles (FREE) with great, on-site photographs by the WhyAfrica team (FOR SALE UPON REQUEST)
- Three digital magazines per year (FREE)
- Live updates, video clips, articles, and podcasts during and after WhyAfrica’s annual road trips (Southern Africa in 2022, East Africa in 2023 and West Africa in 2024) (FREE)
- Sponsorship and advertising opportunities for the annual WhyAfrica Overland Road Trips (PAID FOR)
- A library where companies doing business in Africa can display scientific or research papers (PAID FOR)
- A product section where companies doing business in Africa can display new offerings or services (PAID FOR)
- Media partnerships with, and a presence at, most of the major conferences and exhibitions in the African mining, energy, agriculture, infrastructure, water management, ESG, environmental management, tourism, development, and conservation sectors (FREE)
- WhyAfrica connects potential investors with new ventures in Africa and suppliers and service providers with existing companies in Africa (PAID FOR)
- WhyAfrica assists companies in generating content focused on the wider African business community (PAID FOR)
- Partnerships with companies doing business in Africa (PAID FOR)
- Partnerships with companies thinking about expanding into Africa (PAID FOR)
- In 2023 subscribers will have access to our in-depth articles about the African political economy, research, and country reports about the countries we visit on our road trips, and trends in the sectors that we cover (PAID FOR)
- A WhyAfrica book is in the pipeline and if all goes according to plan, should be published towards the end of 2023 (PAID FOR)
- The WhyAfrica consultancy arm assists and advises companies doing business in Africa through utilising our extensive global business network (PAID FOR)
Become part of the WhyAfrica community. Tell us your story. Expand your footprint across Africa and partner with us to make the most of your African experience.