Malawi set for Uranium exports

By Thom Khanje
Daily Times Newspaper, Malawi

Lilongwe, August 5, 2009 -- Uranium exports from Kayelekera Uranium Mine in Karonga, Malawi's northern region district bordering Tanzania, are expected to start next month following months of trial processing and production at the mine since the official commissioning of the mine by President Bingu wa Mutharika on April 17 this year.

In a company report filed with the Australian Stock Exchange last week, Paladin Energy Limited managing director John Borshoff told investors that Kayelekera Mine was in its final development stages and that trial production started at the mine in June.

“By June, projected production was reached at the mine and desired performance was reached and was on schedule,” said Borshoff, adding, “Commercial production at the mine will start early September and first production is planned for shipping out towards the end of the same month.”

Borshoff said the company had so far invested US$167 million at the mine in Karonga and that when fully developed; the mine will produce 3.3 million pounds of uranium for the export market.

According to Borshoff, 34,600 pounds of tradable yellow-cake uranium by-product had been produced from the mine by June this which if export could earn Malawi up to US$1.7 million based on the current international market price of US$52 per pound for the product as recorded of late on the world markets.

The figure is likely to increase by the time exports start in September. The development is likely to ignite excitement and boost the country’s foreign exchange earnings which have for months been in deficits, thereby crippling some of the country’s production lines.

With tobacco exports failing to provide adequate foreign currency for the economy, both government and industry have been banking on the start of uranium exports from Karonga as one of the main short to medium term solution to the country’s foreign exchange generation shortfalls.

According to Borshoff, plant construction at the mine has been “substantially” completed and that focus was now on pit development where the ore body has now been fully exposed across the width of the pit, ready for extraction and commercial processing.

He said the 203 workforce at mine was currently working on daily single shift but was expected to go double shift operation by July.

Borshoff said although the processing plant installed at Kayerekera was the first of its kind built outside Russia and therefore, in need of more trials and refinement, the company had not experienced major problems with its operation so far.

“The crushing and milling circuits are generally operating problem free, with the design grind being easily and consistently achieved,” said Borshoff in the report dated July 31, 2009.

On international uranium prices, which for the past months have been on the downfall due to the global financial crisis, Borshoff reports that spot prices have start recovering with prospects looking highly positive because of an increase in demand.

“”The Ux spot price recovered from a recent low price of US$40 per pound in April to US$52 by the end of June,” reported Borshoff, adding that long term indicator price for the commodity is at US$65 per pound, with uranium demand expected to increase.

“The demand will increase as new nuclear power plants are commissioned world-wide while simultaneously the contribution of secondary supply sources diminishes significantly over the next five years,” said Borshoff.