Insights garnered from research conducted by Simonis Storm reveals that uranium prices will play a pivotal role in catalyzing mining activities within Namibia from 2024 onwards.
Simonis Storm makes these revelations in its latest economic outlook report for 2023 in which it highlights that this anticipated upsurge in uranium mining is likely to have a beneficial effect on interconnected sectors, including utilities and transport.
“The spill-over effects into the supply chains are expected to create more job opportunities, thereby making a substantial contribution to Namibia’s overall economic development,” said the research firm.
The uranium sector in Namibia has recently navigated through a period of moderated growth, primarily due to past challenges, including water supply issues.
However, it is now on the cusp of a significant upturn, buoyed by the global resurgence in uranium demand.
“This resurgence is driven by robust demand for uranium, essential for nuclear energy, which has ushered in a transformative phase in the market characterized by a structural deficit,” said the firm.
The global demand for uranium, estimated at 200 million pounds annually, far exceeds the production levels of about 145 million pounds. Consequently, uranium prices have soared to their highest in over 16 years, reaching up to US$106 per pound. This price surge is underpinned by a combination of factors: production challenges faced by major producers such as Kazakhstan’s Kazatomprom, increased acquisitions by investment entities like the Sprott Physical Uranium Trust and Yellow Cake, and the growing acknowledgment of nuclear power as a cost-effective and cleaner alternative for the global energy transition. Moreover, the ongoing shift away from Russian uranium supplies, especially given the current geopolitical climate, has further amplified the demand for uranium.
These global market dynamics, significant developments are occurring in Namibia’s uranium sector.
“Paladin Energy’s Langer Heinrich Uranium mine, a major project that was on care and maintenance since 2018 due to previously low uranium prices, has resumed production. This resurgence, backed by a US$150 million debt funding from Nedbank and Macquarie Bank, marks a pivotal moment in the country’s uranium industry. The mine is expected to produce 77.4 million pounds over its 17-year lifespan, indicating its significant long-term contribution to the market.
“Australian explorer Elevate Uranium is intensifying its growth strategy in Namibia, focusing primarily on the Koppies project. This expansion reflects the confidence in the country’s uranium potential and is part of a broader strategy to enhance resource exploration and development activities. Such initiatives emphasize Namibia’s strategic importance in the global uranium market and its role in addressing the increasing global demand for uranium,” explained Simonis Storm.
In addition to the uranium sector, Namibia’s mining industry is experiencing increased exploration activity and interest across various minerals, including rare earth elements, base metals, and nuclear fuels.
“This diversification supports the growth in the mining industry and aligns with the significant boom in uranium exports experienced by the country, as evidenced by N$2.8 billion worth of uranium exports in November 2023. The Namibian uranium sector, set against the backdrop of a revitalizing global uranium market, highlights the significant role and potential of the country in the global energy landscape.
“With strategic investments, robust market conditions, and a forward-looking approach to resource development, Namibia’s uranium industry is poised for sustained growth and is set to make a substantial contribution to the global energy mix.”
The mining sector in Namibia maintains a positive outlook, presenting a promising trajectory that is expected to persist throughout the year 2024. This sector is foreseen as a steadfast driver of the country’s Gross Domestic Product (GDP) growth, contributing significantly to economic expansion and development in the foreseeable future.
The primary industries, notably mining, have been key drivers of Namibia’s economic growth. Diamond processing and export play a significant role in this sector. For the primary industries, a slowdown in growth is anticipated following a robust performance in previous years. This sector, which includes diamond mining, other mining, and quarrying activities, is crucial for Namibia’s economy.
“In 2024, the anticipated expansion represents a decline compared to the notable growth forecasted in 2023 and the significant surge observed in 2022. This deceleration is primarily attributed to the elevated base effect resulting from the exceptional growth rates in the preceding year, particularly in diamond mining and other mining & quarrying sub-sectors,” added Simonis Storm.
The mining industry in Namibia is poised to maintain double-digit growth in 2023 and 2024. This growth is attributed to various commodities mined in the country. The Erongo Desalination Plant, managed by Orano Mining Company, is scheduled for upgrades to improve capacity and sustainability, including the addition of solar power through a ten-year agreement. Construction is underway, with an expected operational date towards the end of 2024, as stated by the Executive Chairperson.
Trigon Metals is gearing up for the initial phase of underground mining at the Kombat mine in early 2024, targeting an average copper grade of 2.6% over a 10-year mine life. Prospect Resources Limited, in collaboration with Osino Resources Corp., has begun Phase 2 drilling at the Omaruru Lithium project in Namibia as part of their earn-in agreement for a 50% stake. Bannerman Energy has secured a mining license for its Etango Uranium Project, enabling the company to award key contracts valued at approximately N$36 million.
B2Gold Namibia is transitioning Otjikoto gold mine from open-pit to underground mining to enhance production, with open-pit operations concluding in 2025. The underground phase is anticipated to persist until 2026, with the potential for extension pending the success of the ongoing exploration program in identifying additional mineral deposits underground operations potentially extending until 2026.