The Scarce Resource: Husab driving skills shortage competition

 

Swakopmund – China Guangdong Nuclear Power Co's Husab uranium mine in Namibia, the country's biggest mining investment is driving mining companies' competition for scarce skills in the country.

Husab, which on full production aims to produce 15 million lb of uranium oxide by around 2017, becoming the world's fourth largest mine by output, will officially launch its mining operations next month.

Existing players in the uranium mining sector such as Paladin Energy's Langer Heinrich uranium mine, feel Husab, a joint venture between Chinese investors and the Namibian government will add to pressure on shortage of badly needed skills such as engineers.

“There is going to be some short-term pain in as far as skills are concerned. What we know for sure is that we are going to lose some people. It's just a matter of how many,” Langer Heinrich managing director, Simon Solomons, said in an interview during a recent tour of the mine.

China Guangdong bought the Husab deposit for US$2 billion from Extract Resources of Australia in 2012, taking control of what is believed to be the world's fourth largest deposit of uranium, as China intensifies efforts to secure supplies for operations at home.

Husab, which will be officially opened by President Hifikepunye Pohamba next month, employs between 6 000 to 8 000 workers during the construction phase.

While there might be lesser competition for skills in the mining, mines are likely to be competing for experienced professionals in engineering and related fields, Solomons said.

He admitted that Husab is “absorbing a lot of people in the mining industry” due to the size of the operation.

Some workers are using mines which are already in production to gain experience before moving on to new projects, Solomons said.

“Until that operation (Husab) reaches a steady state of production, there is going to be demand for skills, especially in processing and engineering, those are the areas all of us are likely to be exposed,” Solomons said.

“Most operations want plus five years’ experience, as those are the skills which give you the most value, in a mining operation you got to have that experience,” he added.

Meanwhile, uranium mines are also staring the challenge of rising prices of water, a scarce resource in semi-arid Erongo region.

“At the moment, there is no long-term solution to the water supply situation for the three mines,” Langer Heinrich's Solomons said.

Langer Heinrich, which consumes 130 000 cubic metres of water a month at its mine and plant, says it has had no long-term and no firm discussion with Namibia Water Corp' over supplies to its mine.

Water to the uranium mines is being supplied from a 20 million cubic metres capacity water desalination plant belonging to Areva SA.

Areva SA, the French nuclear reactor builder, built the desalination plant to supply water to its Trekkopje uranium project, which it mothballed citing the slump in the prices of uranium.

Areva is currently in discussions with national water utility, Namibia Water Corp (Namwater), which it wants to buy a majority stake in the plant.

The pending transaction between Namwater and Areva is stoking fears within uranium mining companies that prices are likely to go up as Namwater seeks to recover its capital investments in the desalination plant.

The uranium mines “don't have to pay additional capital costs for Namwater buying the Areva plant”, Solomons said.

“What the uranium mines need is secures and cost-effective water supplies. At the moment, there are no guarantees for that.”

He said speculatively that there is a likelihood of Namwater going on the market to raise capital to finance the desalination plant purchase.

“It's not like they (Namwater) have spare cash lying around in the bank, they have to look for finance to buy the plant and they will pass on those charges to the uranium mines,” Solomons said.

Rössing, Langer Heinrich and Husab mine require up to 10 million cubic metres of water per year, Solomons said.

Mining companies were previously supplied from Omaruru Delta aquifer, which is facing dwindling volumes as demand from the mines and surrounding towns of Swakopmund, Walvis Bay and Henties Bay goes up.

April 2014
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