Business research company, Frost & Sullivan, said uranium is poised to overtake diamonds as Namibia’s largest foreign currency earner.
It said diamonds would, however, continue to play a key role in the southern African country’s mining industry.
The research company said in a report that although global economic trends such as rising commodity prices, surging demand for commodities by emerging economies and spiraling global demand for energy had resulted in strong investor interest in Namibia's diamond and copper mining sectors, it was the uranium sector that would continue to attract the bulk of mining investment in future.
"High uranium prices, paralleled by growing global demand for energy, will result in Namibia doubling its uranium production to approximately 12,000 tonnes by 2015 from the 5,300 tonnes the country produced in 2010," said Frost & Sullivan's IPC Industry analyst Wonder Nyanjowa.
"Namibia's extensive uranium deposits, coupled with the expansion of existing mines, will result in the country's uranium production increasing sharply in the short to medium term."
Namibia was the world's fourth biggest uranium producer.
Frost & Sullivan said uranium, which attracted $1,75 billion in investment last year was set to reach $2,38 billion over five years.
It also noted that expansion projects at the Rossing Uranium and Langer Heinrich uranium mines, together with the construction of two new mines by the Areva Group and Forsys, would result in a surge in Namibia's uranium production by 2015 or 2016.
The story of diamond mining in Namibia had not been a rosy one for the past few years, as it was badly gored by the global economic recession.
Growth in the country’s diamond value added declined by 49.7 percent in 2009, which resulted in the sector’s contribution to GDP falling from 7.4 percent to 3.6 percent in 2009, said Investment House Namibia in an economic outlook for 2011 and 2012 released earlier in the year.
The diamond mining sector’s contribution to total mining had consistently declined from 87.9 percent in 2003 to 36.3 percent in 2010, due to a decline in diamond mining and the increased contribution from other mining sectors.
Namdeb, a leading diamond miner in Namibia, produced 939 937 carats of diamonds in 2009.
Its production, however, surged by 56.6 percent from 2009 levels to 1.47 million carats in 2010.
Namibia’s central bank noted early this year that diamond production was "at capacity" and that "at present the life of the land operation was expected to end by 2014, if no expansion or extension is made."
It also pointed out then that if offshore diamond production failed to increase by (last) March, the country would see a decline in diamond production beginning in 2012.
“Structural challenges continue to confront the industry, including mining lifespan and new technology to continue with operations,” the central bank said.
“Currently, most of the diamonds mined are sourced from offshore operations, with the resource from onshore operation gradually diminishing.”
Expanding into offshore diamond mining would require massive capital outlays while extending Namdeb’s operations lifespan to 2050 would also require up to N$8 billion ($1,2 billion) over the next 10 years.
Namdeb, which launched the project to expand its mine operations to 2050 end of last year, said its strategic project team was investigating methods to accelerate critical stay-in-business projects, which had the potential to expand the life of its mines.
During 2010, Namdeb’s portfolio of projects comprised a total of nine studies, which include the Inshore Project, Sendelingsdrift Project, Red Area Complex, Elizabeth Bay Optimisation and the Southern Coastal Beach Accretion.
The majority of Namdeb’s unexploited long-term potential lied in the hostile shallow marine and surf zones.
The company planned to implement new systems and technologies to sample and mine these areas economically.
Although, Namdeb had embarked on this ambitious project analysts were not confident that diamonds would remain a major contributor to the country’s foreign currency earnings.
However, offshore diamond mining was the future of the country’s diamond mining, hence the recent move by Windhoek to acquire an equal share in De Beers Marine.
Although, Frost & Sullivan had so much faith in the future of uranium in Namibia, it appeared as if the new mining policy being espoused by the Namibian government would somewhat dampen the uranium rush seen in the country for the past years.
Namibia recently indicated that it would reserve all new prospecting and exploration licences to Epangelo and foreign firms interested in mining in the country would have to partner with the state-owned mining firm.
The Frost & Sullivan report was written prior to the announcement of these new mining regulations.
Rather it touched on the delays in issuing prospecting and mining licenses in the country.
This, it said, would likely result in the country losing potential investors to other countries.
"Namibia should provide a one stop shop facility for the issuing of prospecting and mining licenses to avoid losing investors in its mining sector to other countries,” Nyanjowa said.
"This will significantly reduce the delays that potential investors are experiencing in getting regulatory approvals."
So, with uranium set to override diamonds as the major foreign currency earner, it would indeed take time before gems become irrelevant to the Namibian economy, as Frost & Sullivan noted.
Мэтью Няунгуа, Rough&Polished, из Намибии
