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Tanzania: New Hope for Uranium Wealth in Dar

31 July 2007
Posted to the web 31 July 2007

Wilfred Edwin
Nairobi

Tanzania is set to experience a flurry of activities in its mining industry as recent explorations have identified uranium rich sandstone formations in the country.

Two foreign exploring companies - Uranium Resources Plc, a uranium mining company focusing on Southern Africa, and Australia-based Western Metals Ltd - said last week that "recent exploration results have been highly encouraging and indicate the economic potential of the region."


The companies, currently undertaking a joint venture, Mtonya Uranium project in the country, said they had entered "a very exciting phase of exploration" for the mineral, whose world demand is outstripping supply.

The initial reconnaissance drilling at the Mtonya Uranium project has identified uranium hosted in sandstone units similar to those found at neighbouring Malawi's Kayelekera uranium project.

Western Metals is listed on the Australian Stock Exchange, while Uranium Resources Plc is listed on the London Alternative Investment Market (AIM).

The joint venture says the initial first pass-drilling programme has "achieved its aim of identifying significant subsurface uranium mineralisation in the Mtonya JV licence areas."

James Pratt, an official of Uranium Resources, told The EastAfrican from the United Kingdom last week: "The joint venture is now positioned to progress its exploration activities aggressively over the remainder of 2007 and beyond."

Drilling will recommence in August with a view to further testing the anomalies and following up the initial results, and apart from the drilling, an extensive trenching, sampling and mapping programme will be undertaken.

According to Mr Pratt, uranium operations are complicated as safety and environmental precautions are involved, and as such, commissioning of the mines could take up to five years if all goes well. He said the project has already consumed about $1 million.

Dr Peter Kafumu, the Commissioner for Minerals at the Ministry for Energy and Minerals, confirmed last week that the companies have been granted uranium exploration licences and are currently engaged in uranium exploration.

Industrial sources say the present world demand for uranium is outstripping supply and about a third of annual demand for uranium is being met by declining inventories and Russia's highly enriched uranium weapons decommissioning.

The Sydney-based Resource Capital Research sees a bullish outlook for the uranium market and has predicted that the uranium price will reach $125/lb this year and may escalate to $140/lb by September 2008.

The major application of uranium in the military sector is in making high profile weapons, whereas its main civilian use is to fuel commercial nuclear power plants. Experts say by the time it is completely fissioned, one kilogramme of uranium can theoretically produce about 20 trillion joules of energy, or as much electricity as 1,500 tonnes of coal.

Currently, 17 per cent of world electricity is generated through uranium, but still its demand is hardly met by the supply. Global electricity demand is growing rapidly. Even with effective energy efficiency programmes in developed countries, the International Energy Agency (IEA) expects global electricity consumption to double by 2030.

If indeed the uranium exploration develops into "full commodity availability," it will definitely become one of Tanzania's more important foreign exchange earners, analysts predict.

This prediction is bolstered by the fact that there has been little exploration for 25 years and no new mines built outside Canada for the past 20 years, and that there is not enough uranium capacity to satisfy existing plants - crucially, new uranium deposits need to be put into production now.

Experts say despite the favourable geology for uranium deposits and several known occurrences, the average historical expenditure on uranium exploration in Tanzania has been $4 per square km, compared with $16 per square km in the West Africa and $224 per square km in the United States.

They say Tanzania has also favourable regulatory and stable political conditions for exploration, as evidenced by the boom in its gold mining sector in the past 10 years as well as the strong investment in nickel, platinum and coal exploration.

Western Metals has an agreement with Uranium Resources plc including the Mtonya Project in Tanzania where it predicts it can earn 60 per cent profits by spending $4 million.

It also has a 42.5 per cent interest in an additional 10,413 sq km of tenements in Tanzania, bringing the license area to 13,851 sq km with a further 211 sq km under a 45 per cent joint venture.


George Bauk, Western Metal managing director, and Willie Rowe of Gryphon Management Australia said in an update announcement posted at the company's website that the results of the reconnaissance are considered encouraging, and that "Western Metals is entering a very exciting phase of exploration in Tanzania."

"Several anomalous areas identified will require further detailed exploration during the second half of 2007 including drilling and detailed airborne radiometric surveys. Assay results of samples and details of sites visited will be released when they are received."

Uranium Resources has primarily concentrated on expanding and developing its portfolio of uranium licences in the highly prospective Karoo Basin in the Southern Tanzania where it currently has a land package in excess of 7,600 sq km.