The line on China has always been: companies here are primarily concerned with securing supplies of valuable commodities. With revenues and profits coming second.
That certainly appears to be the case with one of the latest Chinese mines to open its doors. In a commodity no one seems to think is profitable at today’s prices.
That’s the Husab uranium mine in Namibia. Which according to local reports started up production of ore last week.
The development is being led by China General Nuclear Power Corp (CGNPC). Who have designed Husab to produce maximum output of over 12.7 million pounds of uranium oxide yearly. Which would make the mine the second-largest uranium producer on the planet.
It will take some time to get there. With processing of ore into final product at Husab not expected to begin until next year. And full capacity not projected to be reached until 2017.
But even in the ramp-up phase this will undoubtedly be a significant contributor to global uranium supply. Possibly as early as several months out.
Of course, “global” supply is a misnomer in this case. With Husab’s output expected to go to exactly one place: China. Where it will be used in CGNPC’s growing fleet of nuclear reactors.
It’s that sort of single-minded dedication to supply that appears to have driven Husab forward. At a time when almost every other uranium development project on the planet has been shutting down.
In fact, it’s likely that Husab will be operating at a significant loss. Given that the hardrock uranium deposits of Namibia are noted as some of the higher-cost producers worldwide. Areva’s Trekkopje mine here was in fact one of the first to shut down when uranium prices fell–having been idled since 2012.
All of which suggests the old wisdom about the Chinese push for resources at any cost has some truth to it. It’s interesting to think about the effect on global markets when you have a major producer who appears to care little about pricing.