Growth consulting company Frost & Sullivan reports that the uranium mining industry in Southern Africa is looking buoyant, with 25 current expansion projects, pegged at a combined value of $8.65-billion, planned in the Southern Africa region, including Namibia, South Africa and Malawi.

Frost & Sullivan industrial automation, mining and manufacturing research analyst Yeukayi Kadzere tells Mining Weekly that as many as ten projects are currently in the construction stage.

“Namibia, for one, has seven ongoing prefeasibility- and three construction-stage uranium projects, with a combined worth of $5.0-billion, in the Erongo region. Uranium production in the country is expected to quadruple in the near term, owing to the increase in exploration and expansion activities in the Erongo region, with four new mines expected to become operational by 2014,” she explains.

Kadzere adds that other uranium expansion projects in the region include exploration projects in Botswana, Mozambique and Zambia. “Southern Africa’s uranium production is projected to increase to about 21 260 t in 2016, from the 6 628 t produced in 2010,” she says.

Meanwhile, South Africa’s prefeasibility- and construction-stage uranium projects are collectively worth $2.22-billion.

The main projects expected to add capacity to South Africa include French nuclear company Areva’s Ryst Kuil mine, in the Karoo, in the Western Cape, and mining company Namakwa Uranium’s Henkries deposits in Namaqualand, in the Northern Cape.

“The Ryst Kuil project was placed on hold by Areva in December 2011 owing to feasibility issues caused by a global drop in uranium stocks, while Namakwa Uranium has acquired a prospecting licence for the Henkries deposits and is yet to start developing the asset,” she notes.

Growth
Kadzere attributes growth in the uranium industry to the rising global demand for nuclear energy, particularly from China and India, and states that the planned production of nuclear energy in Africa is likely to accelerate the development of uranium mining projects in the Southern African region. “There is strong emphasis towards decreasing carbon emissions, which will accelerate the development of uranium projects in Southern Africa,” she adds.

Further, industry growth is the result of political stability, transparent regulatory procedures and improvements in the macroeconomic environment, which are encouraging international mining companies to invest in uranium projects in Southern Africa, states Kadzere.

“In the last few years, more African governments have upgraded their mining legislation to include uranium mining and this has attracted a lot of investment by international players, such as mining companies Rio Tinto and Areva. Most projects, however, have been deferred owing to the low uranium prices and the difficulty in financing projects,” she says.

Kadzere adds that the combination of dwindling coal reserves, increasing domestic coal consumption and export demands will make it inevitable that South Africa generates additional nuclear power capacity by the year 2028.

“South Africa has a nuclear energy target of 23% by 2030, but has currently only achieved 5%. The Department of Energy plans to increase the country’s nuclear power generation capacity by building about six nuclear plants by 2029, reducing the heavy carbon emissions from coal-fired power plants,” she states.

Challenges
Kadzere says that the bulk of South Africa’s uranium projects are recovery and tailings-treatment upgrade projects at gold or copper processing facilities.

“South Africa, therefore, has the required skills to handle uranium production. The country’s infrastructure is also adequate to support the importation of ore processing chemicals and the transportation of uranium to Eskom’s Koeberg nuclear power station. There is also a relatively straightforward regulatory framework in place to manage and control uranium mining and all related impacts,” she notes.

Kadzere further explains that what South Africa and the Southern African region needs is capital investment to expand production capacity at current facilities, recommission operations under care and maintenance and adapt operations to stricter environmental and safety regulations.

“Uranium production requires electricity and some mines have had to supplement power from Eskom with diesel generation. Eskom needs to guarantee electricity to mines to enhance production,” she says.
Kadzere notes that the Fukushima incident, which took place in Japan in March 2011, highlighted the age-old debate on the safety of nuclear energy once again, and it raised concerns worldwide, creating volatility in uranium prices. Uranium prices fell 40%, causing the continuance of uranium production to be uneconomical for uranium producers.

“The Rössing uranium mine in Namibia has announced plans to cut 17% of its workforce in a bid to circumvent escalating operating costs despite low prices and subdued demand for uranium,” she says.

The uptake for the metal also declined as key markets closed nuclear plants weeks after the disaster. Germany closed eight plants.

“Germany has also committed to closing its remaining nine reactors by 2020. Another Fukushima-type incident will dampen public perception, raising fears about the safety of uranium. The existence of a substitute, such as thorium, which is cheaper and safer, could present serious challenges for the uranium mining industry in the long term,” Kadzere explains.

Technology

Despite the Fukushima drawback, the long-term resurgence of demand for nuclear energy is expected to influence the development of new uranium mines.

“There have been time and cost overruns at some of the new nuclear build projects, particularly in Europe. The overruns pertain to first-of-a-kind technology platforms, which incorporate improved safety features; so there are efforts to improve the safety of nuclear energy.

“Japan is expected to reopen eight of its nuclear reactors this year, which is expected to stir demand for uranium in the short to medium term, as Japan relies heavily on imported uranium,” she states.

Potential for Growth
South Africa has the fourth-largest ura- nium reserve in the world and the mining of this resource will enable the country to ensure security of supply and produce nuclear fuel for its own plants and the export markets.

“As a developing economic region, Southern Africa needs electricity and the development of nuclear energy will help alleviate the current shortages. To develop the nuclear energy capacity, the region will also need to increase its production of uranium,” says Kadzere.

Further, she notes that Navigant Con- sulting’s ‘Green job realities: Quantifying the economic benefits of generation alternatives’ report states that nuclear power, as an alternative energy source, generates the second-highest number of direct and permanent jobs after solar photovoltaic installations.

“At least 84 new nuclear power reactors are expected to be commissioned globally by 2017. Currently, the industry has 499 new reactors planned – 171 in China, 57 in India, 44 in Russia, 34 in the US and 13 in Ukraine. So, even if Southern Africa does not develop its nuclear power plants, there is a global export market to supply,” Kadzere concludes.