Husab production at snail’s pace

Husab Mine, amongst top three biggest Uranium mines in the World has not managed to live up to expectations with regards to reaching full production as elsewhere low prices have forced uranium production to halt.

“Our mine hasn’t been ramping up to full capacity yet. Husab mine has had a lot of delays, I think they produced one barrel in December last year, and then it was quiet again,” says research analyst at IJG Securities Dylan van Wyk. 

The Chinese owned mine is expected to be a significant growth catalyst, “It should have been at full production by now,” Van Wyk says, “But now it seems they will reach or ramp up to full production sometime next year or the year after.”

The Uranium dream continues to be elusive for Namibia’s economy which is currently dragging under subnormal GDP growth albeit a better performance in some sectors like agriculture and forestry (17%), Livestock farming (12.5%), the diamond subsec­tor (33.2%) and manufacturing (2.9%).

“The other mines have been scaling down due to the prices. They are just staying in maintenance mode, Langer Heinrich is only processing deposits that have already been mined, so they are not mining new ore,” says Van Wyk. 

   In their revised economic forecast report, IJG says, “The largest miner of uranium in the world, Cameo announced in April that it would be halting production at its Rabbit Lake mine. Paladin Energy’s Langer Heinrich announced plans to cut production in 2017, citing weak global prices of the commodity, joining an earlier move in this regard by Rio Tinto-owned, Rossing Uranium.” 

 The IJG analysts have also noted that Global Inventories of uranium are at very high levels while estimates point to six to seven years of supply stockpiled.

Despite uncertainties in the spot market prices, IJG said in their report, “We do not see uranium prices remaining at the irrationally low prices they are currently trading at, and expect some recovery to around US$27-32 by the end of 2017.”

They are optimistic of a rebalance in the demand and supply dynamics and by 2020 they, “Should have rebalanced to such an extent that prices could reach and level out around US$65 according to Dundee Capital Markets.”

“Despite the current glut, the outlook for uranium price is quite positive. There is a strong consensus in the sector that it’ll bounce back,” the analysts opine.

They are however realistic, “… but this might take a few years to achieve. If nuclear projects commence as scheduled, we expect uranium prices to move much higher over the long-term. Demand is expected to grow significantly in coming years as reactors in Japan start to come back online post-Fukushima.”

“Furthermore, many countries, particularly China and India, have been looking to reduce their carbon footprint and improve their air quality, and are turning to nuclear power to reach this goal. Currently, there are 59 nuclear reactors under construction worldwide, 20 of which are located in China, seven in Russia and five in India. Most of these are only expected to come online around 2020,” they affirm.