Areva Namibia-Unit Water Deal to Ensure Supply for Rio, Paladin

Areva SA (AREVA)’s Namibian unit will sign a 10-year deal this month with a state-run utility to maintain water supplies essential to uranium mines in the country owned by companies including Rio Tinto Group and Paladin Energy Ltd. (PDN)

The agreement with Namibia Water Corp. will be completed at the end of June, Hilifa Mbako, managing director of the Paris-based nuclear company’s local unit, said in an interview.

Areva runs a 20 million cubic meter desalination plant in the semi-arid Erongo region west of the capital Windhoek that supplies Rio’s Rossing Uranium Ltd., Paladin’s Langer Heinrich mine and China General Nuclear Power Holding Corp.’s Husab site under a temporary deal expiring in October. Namibia is the largest uranium producer after Kazakhstan, Canada and Australia.

The new agreement will mean Areva supplies Namibia Water, or Namwater, which will then distribute it to customers.

“We are ready to sign an agreement for long-term supply with Namwater,” Mbako said by telephone on June 3. “The agreement is already there, awaiting both parties to sign.”

Namwater needs Areva’s supplies to supplement its own ground sources, the Omaruru Delta and Kuiseb River aquifers, which are struggling to cope with rising demand from mines and the coastal towns of Walvis Bay, Swakopmund and Henties Bay.

The agreement with Areva will be for 10 years, “but it’s more about quantity than timeframe,” Mbako said. “Water is a big problem for the mines, and almost everybody in Namibia, but this problem is more acute in Erongo.”

Uranium miners in Namibia, already struggling with water shortages in Erongo, are facing surging costs, Paladin said in April. The cost of desalinated water is higher than for natural sources because of the cost of building the plant, Mbako said.

Areva is still discussing a proposal for Namwater to buy a stake in the facility, Mbako said. “We made an offer for them to take equity and have both agreed to proceed with those talks,” he said. Areva initially intended the plant to supply water to its Trekkopje project, shelved in 2012 as uranium prices slumped following Japan’s Fukushima nuclear meltdown.

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 Tony Barrett, Reed Landberg

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