Paladin’s Heinrich Namibia Uranium Mine Freezes New Plant Plans

Paladin Energy Ltd. (PDN) said it’s frozen plans to invest in a new processing plant at its Langer Heinrich uranium mine in Namibia after the price of the nuclear fuel fell below the level needed to justify the spending.

“With current pricing it’s not economic to start new investments, we need at least a price of $70 a pound of uranium,” Langer Heinrich Managing Director Simon Solomons said in an interview yesterday at the mine, situated 80 kilometers (50 miles) north-west of Swakopmund in the south-west African country.

The new plant would have been part of an expansion aimed at raising output to 8.5 million pounds of uranium oxide a year. The facility now has capacity of about 5.2 million pounds a year, sold to three converters in France, Canada and the U.S.

Plans for the new processing plant may be reconsidered in about two years, Solomons said. Banks are unwilling to bet on a recovery in uranium prices after they fell to about $34 per pound following the Fukushima nuclear plant shutdown in Japan three years ago, he said.

“The biggest strain on producers right now is not so much the current situation but the future movement of the price,” Solomons said. “The expectation is that the price goes up but whether it goes up to above $70 nobody knows. The price is unlikely to turn around until Japan makes a firm commitment on how many reactors it’s going to bring back.”

Paladin, based in Subiaco, Australia, is in the process of selling a 25 percent stake in the Namibian mine to China Nuclear National Corp. for $190 million. The Chinese state-owned operator “isn’t going to raise its shareholding in Langer Heinrich but they may be interested in some of our other projects, worldwide,” Solomons said.

To contact the reporter on this story: Felix Njini in Namibia at fnjini@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net John Bowker, Tony Barrett

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