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Namibia Mining Report Q4 2010
Business Monitor International, Oct 2010, Pages: 57
Weatherly to resume copper mining in 2011
In July 2010, copper miner Weatherly International announced that it had secured financing of US$7mn from Louis Dreyfus Commodities to help fund the reopening of its Otjihase and Matchless copper mines (which were both placed on care and maintenance in late 2008). It hopes that Otjihase can be back in production during Q111, with Matchless resuming production during Q211. Further funding for restart costs will come from the previously-announced sale of the Kombat mine (for US$3mn) and other ‘cash on hand’, according to the company. Weatherly has also announced plans to sell a 20% stake in Otjihase and Matchless to local concerns.
Weatherly plans to restart its operations in line with an independent technical review that it commissioned from Coffey Mining. This review envisages average annual production of 7,000 tonnes of copper contained in concentrates over the coming five years, with production peaking at just over 9,000 tonnes in 2013/14. The company will also look to resume production at its Tschudi open pit mine over the medium term.
This resumption of copper production by Weatherly will clearly do much to increase the overall output of the Namibian copper sector over the forecast period. To that end, the authors have revised up the predictions for copper production in Q410.
Country Overview
Namibia is richly endowed with natural resources; in particular uranium and diamond deposits. The country is the world’s fourth-largest producer of uranium and among the largest gem-quality diamond producers in value terms. It also features among the top five nations around the globe for its zinc, copper and lead reserves. To expand the revenue earning potential of its mining industry, the Namibian government is making a concerted effort to establish a strong domestic market for diamond-cutting and polishing. Taken together, these factors underscore the importance of the Namibian mining industry for its economy.
Industry Forecast
The authors are largely optimistic on the outlook for the Namibian mining sector at present. Demand for diamonds has picked up and there are several uranium mining facilities set to open over the coming few years. Rounding out this propitious picture is the planned resumption of copper mining by Weatherly International during the first half of 2011.
Over the coming years, the authors foresee uranium playing an ever more important role within the Namibian mining sector, becoming more valuable to the country than diamonds. Indeed, already in 2009, uranium sales (of NAD4bn) outstripped diamond sales (of NAD3.8bn) for the first time. Although diamond output should regain traction in 2010, uranium output will also receive a significant boost from the four mines currently scheduled to come onstream between 2010 and 2015. The authors recently made some upwards revisions to the forecasts for uranium production to reflect this.
Over the 2010-2015 period, Forsys Metal Corps is expected to open its Valencia project, while Areva SA is expected to begin operations at its Trekkopje mine, Extract Resources is expected to start mining at the Rossing South mine and Bannerman Resources is anticipated to begin extraction at its Etango and Swakop River mine.
At present, the authors believe the Namibian mining sector can grow by an average annual growth rate of 3.23% between now and 2014, with risks very much to the upside as these new projects come onstream.
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