URANIUM prices are set to rise in response to surging global energy needs, and this, together with the growing demand for nuclear energy from emerging economies, has resulted in significant investment in the uranium mining industry in Southern Africa, according to a Frost & Sullivan (F&S) production and investment forecasts.
F&S is an American firm which provides customer-dependent market research and analysis, growth strategy consulting and corporate training services.
Because of rising prices and energy demand, new uranium mines are being developed as existing ones are being expanded in order to cope with the surging demand.
F&S recently noted that there are 13 uranium development projects in Southern Africa, covering Namibia, South Africa, Malawi, Zambia, Botswana and Mozambique, that are collectively worth about N$74 billion.
Namibia, Malawi and South Africa are said to be the largest uranium producers in the region, while development projects in Botswana and Mozambique are likely to become significant players.
"Spiralling global energy requirements and the need to diversify the energy mix to reduce dependence on coal and oil have resulted in increased demand for uranium in the past decade," said F&S mining research analyst Yeukayi Kadzere.
"The Southern African region is perfectly positioned to benefit from these trends due to its extensive uranium deposits."
The heightened demand for nuclear energy, particularly in emerging economies such as China and India, and the strong emphasis on decreasing carbon emissions, will accelerate the development of uranium projects in Southern Africa, according to F&S. These trends will potentially push up uranium prices, while advancing the development of Southern Africa's uranium mines between 2012 and 2015.
"Increasing foreign direct investment and the expansion of uranium mines in Southern Africa will result in production levels rising sharply in the medium to long term," remarked Kadzere.
"Major international mining companies are making significant efforts to boost uranium production through the enhancement of expansion and exploration programmes in Southern Africa."
As new expansion programmes become fully operational, the region's uranium production capacity is expected to reach approximately 21 260 tonnes by 2016 - up from annual production capacity levels of 6 628 tonnes in 2010.
Uranium mining in Namibia is of considerable importance to the national economy with a annual GDP contribution of . In 2011, Namibia was ranked as the fourth largest producer of uranium worldwide, behind Kazakhstan, Canada, and Australia.
Dr Wotan Swiegers of the Uranium Institute of Namibia said F&S has an "optimistic view". According to him, the production figures of the two operating mines in Namibia, namely Rio Tinto's Rössing Uranium, and Langer Heinrich - both in Erongo - will only be available next week.
"No one knows what's really going to happen in the uranium market. The consensus among analysts is that uranium shares remain highly undervalued and, in light of the looming supply gap, prices may rise to meet the world's growing energy needs. The question is when," Swiegers commented.