12 October 2012

Namibia: Areva Postpones Trekkopje Opening

Windhoek — A delegation from the French state-owned energy group, Areva, met with President Hifikepunye Pohamba at State House yesterday to inform him that the launch of the Trekkopje mine will be postponed due to the decline in international uranium prices.

Situated approximately 65km north-east of Swakopmund, the Trekkopje mine was expected to become the largest uranium mine in Southern Africa and the tenth largest in the world.

Areva's country manager, Hilifa Mbako, yesterday told New Era that the current operations would continue as usual. "We are still within the time frame for the initial launch, which was expected to be in 2014, although we are not going full-out until the uranium price has improved," Mbako said.

He added that it is still unclear how many employees will be affected at this stage. "We are in the process of identifying areas which will become redundant during this process. However, once the uranium price improves those that might be retrenched will be the first ones to be re-employed. We will do our best to preserve employment, and accompanying measures will be offered to those employees affected by the decision," he said.

Full-scale production at the mine was initially planned to begin in 2011, but was postponed to this year. In February 2011, Areva announced that full-scale production was further delayed to 2014.

A slump in uranium prices over the past two years and the complexity of the project were cited as the reasons for the delay. The uranium spot price slumped to a two-year low last week at US$45.75 per pound and according to Areva, the project will only be viable when prices hit the US$75 per pound mark. Areva obtained the mining licence from government in June 2008 and has since invested about US$1 billion in the project so far.

"In October 2011, the decline in uranium prices resulting from the nuclear accident at Fukushima (Japan) forced a slowdown in the Trekkopje project to allow more time to optimize the technical and economic drivers of the future operation," Areva announced in a statement released yesterday.

The company says it has been engaged in an intensive programme to find innovative solutions for the launch of the mine, but considering both the continued decrease of uranium prices coupled with the investments yet to be made on site, it had no other option than to postpone the launch of the Trekkopje mine.

All actual construction work will continue until the end of December this year and all existing installations will be then put under a US$10 million structured care and maintenance programme, with the objective to restart the project when the overall market environment allows it.

Areva further emphasised that the Trekkopje mine is a strategic asset for the energy group and it will reassess the economic situation on a regular basis.

The Erongo desalination plant, situated approximately 30km north of Swakopmund at Wlotzkasbaken, will also remain in operation to produce water for industries and populations in the Erongo Region.

The mine was being developed as a very low stripping open cast operation, using conventional methods including scraping, drilling, blasting, loading, hauling and ore feeding to the treatment plant.

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