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Namibia uranium output to jump to 52 mln lb by 2015

Wed Apr 14, 2010 4:03pm GMT

JOHANNESBURG (Reuters) -
Namibia's uranium output is expected to rise to around 52 million pounds of yellow cake by 2015 from 12 million, but new projects will depend on higher prices to make them feasible, a report showed on Wednesday.
Namibia, currently the world's fourth-largest producer, is home to the Rossing mine operated by Rio Tinto, which together with Paladin Energy's Langer Heinrich mine account for about 10 percent of global output.

The two companies have expanded their operations in response to a growing global demand for low-carbon energy sources.

Other companies have been joining the exploration drive, with several new mines due to come on stream within the next five years, but a pick-up in prices will be crucial, said Luise Nakatana, an analyst at Investment House Namibia (IHN).

She estimated Namibia's average uranium operational cost at around $35-40 per pound, compared with an average realised uranium price globally of around $50-55 per pound.

"Therefore we only expect new uranium projects in Namibia to come online with higher uranium prices," she said in her latest analysis of the sector.

Spot uranium on Wednesday stood at $41.50 per pound, down from a record around $136 in June 2007. The long term price was trading at $65 a pound in March, Nakatana said.

"The most significant risk ... is the unfavourable decline in uranium prices, rising construction cost, availability of water and electricity, new nuclear reactors technologies (that may improve fuel efficiency) and access to realistic project financing," she said.

But Nakatana said fundamentals for growth of the industry remained strong, with global uranium demand expected to nearly double to 133,000 tonnes by 2030.

"Planned nuclear plants programmes across the globe and current uranium demand/supply imbalance implies that there will be greater competition for uranium resources in the future, thus supporting greater long-term price gains," she said.

Namibia's uranium exports earned the country 6.45 billion Namibian dollars in 2008, up nearly 55 percent from the previous year, and boosted Namibia's GDP by 6.2 percent during that same year, she said.



If operational costs comes in under $30.00 per pound
MEY will be leading the pack