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Uranium sector soars

Uranium sector soars

Staff Reporter

Uranium prices experienced a surge, reaching $90 per pound (lb) by the end of 2023 and subsequently surpassing the $100/lb mark in early January 2024.

This was announced by Lauren Davidson, an Economist at the Chamber of Mines of Namibia, who explained that the uranium price currently stands at $106/lb as of January 27, 2024, marking a return to pre-Fukushima levels and reaching its highest point since 2008.

Davidson highlighted that this upward trend in the market has been steadily gaining momentum since 2019, driven by a gradual depletion of stockpiles at utilities and stagnant supply levels.

“Analysts and experts have long foreseen this price correction, anticipating an eventual supply gap in the market. The anticipated supply shortfall has indeed materialized, with the World Nuclear Association projecting a persistent deficit of 150 million pounds of nuclear fuel until around 2040. This imbalance stems from a confluence of factors on both the supply and demand sides,” she explained.

Regarding the supply side, Davidson emphasized that an extended period of low uranium prices discouraged investment in exploration, leading to a shortage of new mine developments over the past decade. Meanwhile, on the demand side, increasing governmental support for nuclear power as a stable baseload energy source has bolstered confidence in the global uranium demand outlook.

Davidson further highlighted that for Namibia, the world’s third-largest uranium producer, these market dynamics present promising opportunities for continued growth and expansion within the uranium sector. She disclosed that established producers like Rössing and Husab are ready to renegotiate supply agreements to align with current market conditions, concurrently increasing production to meet rising demand. Additionally, Davidson mentioned that the recent resumption of operations at the Langer Heinrich uranium mine in January this year is anticipated to substantially enhance Namibia’s production profile.

“The timing of awarding Mining Licences for Bannerman’s Etango project and Deep Yellow’s Tumas project couldn’t be more opportune. With the security of their MLs, these companies are well-positioned to leverage the current favourable market conditions to raise the capital required to advance development of their projects. Additionally, Orano is actively evaluating the possibility of restarting operations at its Trekkopje mine, spurred by the improved market circumstances,” Davidson said.

According to her, in the short term, the anticipated rise in production from existing mines, combined with elevated uranium prices, will enhance uranium’s role in contributing to Namibia’s exports and foreign exchange earnings. She further pointed out that the reactivation of operations at Langer Heinrich will lead to the creation of several hundred additional jobs in the mining sector. Moreover, it is expected to generate augmented government revenue through taxes, royalties, and export levies.

Davidson elaborated that the increased activity in the uranium sector will result in substantial socio-economic advantages for the Erongo region. This includes the emergence of new business opportunities and the expansion of existing suppliers to accommodate the heightened production demands. She emphasized that the rise in job opportunities from new mines will not only stimulate local economies but also lead to indirect job creation and revenue generation, surpassing the immediate impacts of mining operations.

“Namibia’s abundant uranium resources, coupled with the current surge in prices, position the country as an increasingly attractive destination for mining investment. Beyond existing operations and upcoming projects, the elevated uranium price is likely to spur substantial investment in exploration for further discovery of ore bodies, which may lead to the development of new mines. This anticipated growth in Namibia’s uranium subsector will play a vital role in diversifying the country’s mining sector sustainably, capitalizing on an improving uranium market with long-term positive fundamentals. With the scaling up of current mines and the emergence of new projects, uranium stands to become a fundamental contributor to Namibia’s GDP and solidify its position as a prominent player in the global market,” Davidson added.

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