[LINK] "Namibia Expands Uranium Mines as Diamonds Lose Shine"

[rfmcdonald]

BusinessWeek's Carli Lourens reports that Namibia is hoping to diversify its economy by becoming a major uranium exporter.

Namibia’s economy contracted 0.8 percent last year, after expanding 4.3 percent a year earlier, as mining output halved. Diamond production plunged to 929,006 carats from 2.22 million carats a year earlier, according to the central bank. Demand for the gems plunged as the worst recession since World War II deterred buyers of luxury items like necklaces and earrings.

“The uranium sector is on the verge of surpassing the diamond industry as Namibia’s biggest,” Luise Nakatana, a mining analyst at Investment House Namibia, a Windhoek-based brokerage, said in an interview on May 18. “If all the proposed projects come on stream, the uranium sector will play a significant role in the country’s economic growth.”

Namibian output may quadruple by 2015 as new mines are opened by companies including Extract Resources Ltd., more than doubling uranium’s contribution to the economy, according to IHN. The industry accounted for 5.6 percent of Namibia’s gross domestic product last year.

[. . .]

Uranium companies are planning to spend more than $3 billion starting operations in Namibia, he said. In 2008, the country became the world’s fourth-biggest producer, up from sixth. The Moscow-based State Atomic Energy Corp., known as Rosatom Corp., said last week that Russia is prepared to invest about $1 billion developing uranium deposits in Namibia.

The nation has “significant” reserves and isn’t plagued by political instability like some rival producers, Marino G. Pieterse, a uranium analyst and editor of Uraniumletter International, said by phone from Amsterdam.

It does have a water supply problem, which is a “major concern” for companies planning to start production in Namibia, said Heike Smith, head of research at Windhoek-based IJG Securities Ltd. The country is mostly desert or semi-desert.