Uranium spot prices on the global market, despite picking up slowly, are still far below the required threshold to enable Paladin (Africa) Limited resume uranium production at Kayelekera in Karonga, Business Review has established.
The dual-listed Australian company, which suspended uranium production at Malawi’s largest mining investment venture in February 2014, is keeping its fingers crossed to see uranium prices reach between $70 and $75 per pound before it resumes production.
Such a desired range is deemed a profitable threshold by the company.
Business Review Internet search on Tuesday found that uranium spot price hovered at around $39.50 per pound at the start of this week.
Such a spot price represents a $0.40 marginal increase from last week’s $39.10 per pound, according to an online publication, www.miningweekly.com.
But the price range is half-way the threshold level, according to the publication, which said that any consideration of a resumption of production is still some way off.
Uranium prices surged by more than 30 percent in the first 11 months of last year to $44 per pound in November 2014 as a result of an anticipation of increased demand before dropping to $36 per pound in December 2014, according to our search.
Many countries, particularly in Asia, are engaged in nuclear power expansion programmes with upgrades at existing nuclear plants and plans to build new reactors.
Currently, China has 30 nuclear power plants under construction as it seeks to generate one-fifth of its power from non-fossil fuels by 2030.
On one hand, Japan also plans to bring some nuclear power plants back online after they were idled, following the Fukushima crisis, a situation international mining experts believe could prop up uranium prices on the global market in the near future.
Paladin [Africa] Limited resident director Greg Walker, in an e-mail response to questions, earlier described the recent improvement in the spot price of uranium on the global market as “very encouraging”, but said any consideration of a likely resumption in production at KUM was still way below.
But Chairperson of Malawi Natural Resource Justice Network (NRJN) Kossam Munthali said on Tuesday that continued delay by Paladin to resume production confirms that the firm is no longer interested to come back to Malawi to pursue further mining.
Said Munthali: “It is a clear symbol that they are no longer interested to resume mining. To us, Paladin has yielded what they wanted. We are not seeing any hope from Paladin and government is just chasing the direction of the wind.”
Paladin announced that KUM, which brought in about $600 million in investment was placed on “care and maintenance” due to low uranium price and non-profitability of the operation, thereby suspending production at the mine.
The decision, according to the company, would preserve the remaining ore body until a sustained price recovery occurs to determine production on a profitable basis.