Swakop Uranium – Continued Investment

Costs are increasing, and talent is hard to source, but Swakop Uranium is overcoming these challenges with a bold vision to invest in Namibia’s future.

Swakop Uranium is more than a company. It is a symbol of the partnership between the Namibian and Chinese governments to mine uranium for the production of clean energy. The business’s basic principle of “Safety First, Quality Foremost, Pursuing Excellence” place safety and sound environmental management above all else, and the entire Swakop Uranium family is aligned in living up to this principle. Providing work to over 1,600 permanent employees and roughly 1,000 other contractors, Swakop Uranium is the second-largest uranium producer in the world, a title the firm does not take lightly.

“We take pride in our diversity which we view as a unique competitive edge, similarly, our world-class infrastructure makes SU the best place to work, the best teaching ground for experts and the best learning ground for novices,” explains Qiu Bin, CEO of Swakop Uranium. “We value sound stakeholder relationships and strive to maintain a healthy two-way communication line with our people.”

Swakop Uranium takes pride in its brand slogan ‘More than mining’ and is committed to building an elite workforce that can contribute to socio-economic development in Namibia. It aims to do this while guided by the best practice standards of corporate governance.

“We are the largest single investment in Namibia’s recent economic history. This places a unique obligation on us as management and employees of this great company to achieve, in the shortest possible time, the aspirations of the shareholders, stakeholders and friends of this business. This is an obligation that we take very seriously,” Qiu explains. “Owing to the large size of the business, we are a melting pot of diversity in terms of culture but manage to work to the same golden thread of ‘Safety First, Quality Foremost, Pursuing Excellence’.”

Swakop Uranium has always enjoyed a different perspective from others in the mining industry, thanks to its 20 years life of mine forecast, meaning that the company takes a somewhat longer view of its investments, assets and people, as well as the value it adds to host communities.

“Our vision of growth is real, our intentions clear and actions aligned to the long life of mine ahead of us,” Qiu points out. “Given the uniqueness of mining and processing operations, we offer differentiating technical and managerial experience which prepares professionals to be globally competitive.”

Swakop Uranium’s development approach to SMEs has proved to be a boon to local businesses in the Erongo region and across Namibia. It has helped businesses build capacity and become competitive suppliers for Swakop Uranium and the mining sector in general. The company has also established itself as one that is able to withstand even tempestuous economic times.

“We are relieved to see that the current market trend is positive but what is and has always been our unique selling point is the fact that we already have an off-taker for our product which has allowed us to operate at a time when industrial partners were going on care and maintenance,” Qiu says.

Rising to Rising Costs

We have looked at Swakop Uranium before, and it has a proud track record, but it is also facing increasingly difficult times. Mining operations like Swakop Uranium’s depend on a reliable and economically priced water supply, and the lack of water supply has been an ongoing problem.

“It is by now common knowledge that Swakop Uranium continues to suffer significant financial losses in the last five years due to unavailability of water. This equally threatens future investment decisions on expansion projects currently being considered,” Qiu admits.

This is just one of the increasing costs of doing business. Swakop Uranium’s Husab mine is extremely cost-intensive due to the increased prices of reagents on the international market, increased freight charges, water and electricity, local inflation and potential government policy changes.

Qiu explains how Swakop Uranium has responded to these challenges.

“In the short-term, Swakop Uranium has engaged the relevant water suppliers for interim arrangements to improve water reliability,” he says. “Moreover, we are currently looking into increasing water storage. Medium to Long-term, Swakop Uranium urgently seeks a reliable and economically priced water solution. Given our long life of mine and further investments planned for future expansion, water supply is at the core of our business sustainability. It’s against this background that we support the government’s plan to build a desalination plant.”

Swakop Uranium has also embarked on a cost optimisation exercise across the entire business. The company intends to implement more stringent cost controls and measures throughout this year.

As well as addressing costs, Swakop Uranium also needs to address the skills shortage in Namibia. An operation of this size requires qualified and skilled maintenance and processing engineers. While Swakop Uranium has development plans in place, the skills gap manifests itself in productivity and cost challenges.

“We will reinforce our internal development programs and provide opportunities to high-potential employees in the company,” explains Qiu. “Further, Swakop Uranium will continue to look at available skills in the SADC region as well as secondments from its shareholder companies to fill the skills gap.”

Investing in Namibia

Swakop Uranium must overcome these challenges as the company represents China’s single largest direct investment in Africa. 96% of its workforce are Namibian citizens. In 2021, Swakop Uranium paid 1.53 billion Namibian dollars in tax, N$5.664 billion in local purchasing and N$1.123 billion in wages and salary.

Indeed, since 2015 Swakop Uranium has put many Namibians through tertiary education via its SU Bursary Scheme, affording Namibians who qualify for it an opportunity to study at reputable tertiary institutions.

In 2015, the company established the Swakop Uranium Foundation to conduct its CSR activities and it has invested in the five pillars of Swakop Uranium’s CSR initiatives over the years. Those pillars are community support, health and wellbeing, SME development and poverty alleviation, education and childhood development, and sound environmental management.

It is an investment that Qiu Bin intends to continue.

“In line with our growth path and to secure mining and processing production, Swakop Uranium has employed the long-term services of a mining contractor starting December 1st, 2021. This will provide an additional 250 Namibian jobs and secure mining production of over 100 million tonnes per annum (including owner mining) going forward,” he tells us. “Barring the availability of water, Swakop Uranium is currently at an advanced stage of feasibility studies to explore the treatment of low-grade uranium ore by way of Heap Leach in tandem with the current tank leach operations.”

It is a project whose success will not only add to the value of the business but further increase the already impressive life of the mine. Indeed, Swakop Uranium continues to invest in its exploration drilling program to develop resources on and off its current mining license, looking for mineable reserves that will even further extend the current life of mine.

“Swakop uranium is at the forefront of mining and processing technology application to ensure safe and cost-effective business operations,” Qiu concludes. “The large size of our business, increasing cost of production & our pursuit for excellence are good causes to leverage technology, especially given our proximity to the Chinese market.”

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