Valencia still developing – under the radar

Adam Hartman

AN addition to a road sign along the B2, about halfway between Swakopmund and Usakos, is a sign that things are still happening at the Valencia uranium project of the Canadian mining company, Forsys Metals – even though it has seemingly been under the radar for the past five years.

The sign indicating the ‘Valencia’ turnoff now includes the name ‘Norasa Uranium’.

Since 2008, when Valencia received its 25-year mining licence from the government, the project has been experiencing a few knocks – stopping it short of the production phase.

Just when Forsys Metals was about to clinch a deal with an international mining group, the world financial crisis reared its ugly head, resulting in many investors applying breaks on spending.

“Obviously this was not a good time to close such a deal, but who would have known about the crisis and the impact it would have globally,” Valencia’s General Manager, Dag Kullmann told The Namibian.

Although this was a major setback, the company was prepared to ride out the storm, hoping the mining group would still be interested once the crisis was over. It took longer than expected and the deal never came to fruition. The deal was terminated.

Instead of throwing in the towel, Valencia continued testing its project.

Other licence areas of Forsys Metals were evaluated with additional resources discovered. This resulted in the company updating Valencia’s feasibility report and getting ready to come out into the open again with some fresh prospects as the financial crisis was easing its grip.

Then the Japanese tsunami struck in 2011, killing hundreds of thousands of people and destroying the Fukushima nuclear reactor. This resulted in another problem: reactor programmes were stopped, leading to an excessive uranium stockpile internationally, which consequently negatively impacted uranium prices due to the drop in demand.

“The prospects of investing in a uranium project under these circumstances are difficult,” Kullmann noted.

Swakop Uranium’s Husab project seemed to bypass these circumstances because it was bought by a Chinese group to supply China with uranium for its own reactors, unlike Valencia that would supply the resource to an external client with its own nuclear programme, but because of the poor market conditions, few clients are buying uranium.

In the meantime there have been a fair amount of development in Namibia’s uranium industry. Rio Tinto started plans to expand its resources and operations on the one hand, but had to restructure because of about N$1 billion losses incurred over the last two years.

Areva Trekkopje project was ready to complete its final stage of development before production with its maxi-plant, but because of the market slump, the project has been mothballed until further notice.

Swakop Uranium’s Husab Project was launched – set to be the biggest in Namibia. Peladin’s Langer Heinrich Uranium was the only uranium mine after Rössing to successfully start production and add export value to the uranium.

Although inconspicuous with regards to development, Forsys Metals Valencia project started pumping a few millions of dollars into local community projects and bursaries as part of its social responsibility. They also had a stand at the Namibian Mining Expo in May.

Valencia’s visibility however compared to the other uranium mines has been limited.

In 2012 Forsys announced a consolidation of its various uranium projects around the Valencia project. These included the Valencia East deposit and the Namibplaas deposit – all in their own licence areas.