Paladin (Africa) Limited has described recent improvement in the spot price of uranium on the global market as “very encouraging” but says any consideration of a likely resumption in uranium production at Kayelekera Mine (KM) in Karonga “is still some way off”.
The company, which suspended uranium production at Malawi’s largest mining investment venture in February this year, maintains that the resumption of uranium production will depend on how long uranium price will take to reach its desired profitable threshold of between $70 (K35 140) and $75 (K37 725 per pound.
“The current price is still only half of that threshold level, so any consideration of a resumption of production is still some way off. It will depend on how long the uranium price takes to reach the threshold limit of $70-75/lb [pound] and to be sustained at that level,” said Paladin [Africa] Limited resident director Greg Walker in an e-mail interview.
He was asked to react to the recent rally in the spot price of uranium oxide to $39.50 per pound as of last week.
Such a spot price is an improvement from a low of $28.25 (K14 084) per pound in June 2014.
An Internet research yesterday showed that uranium price has been on steady decline from a record $137 (K68 911) a pound in mid-2007.
Spot prices for the metal sank in the wake of the Fukushima nuclear disaster in 2011, which spurred a bear market in uranium pricing as Japanese nuclear reactors were shut down.
Analysts have since attributed the edging up of uranium prices to the long-awaited restart of Japan’s two nuclear reactors early next year at the Sendai nuclear plant as approved by Governor of Japan’s Kagoshima Prefecture, Yuichiro Ito.
“Kayelekera Mine has successfully completed the orderly transition from production to care and maintenance,” said Walker.
Spokesperson in the Ministry of Natural Resources, Energy and Mining, Levy Undi, yesterday described the development as good news for Malawi, but pleaded for more time to consult for a comprehensive response.
Paladin announced that KM—Malawi’s biggest mining investment ever, worth $600 million (K301 billion) —would be placed on care and maintenance due to low uranium and non-profitability of the operation, thereby suspending production at the mine in the process.
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.