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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHWD #0432/01 3291309
ZNR UUUUU ZZH
R 251309Z NOV 09
FM AMEMBASSY WINDHOEK
TO RUEHC/SECSTATE WASHDC 0876
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHUNV/USMISSION UNVIE VIENNA 0019 UNCLAS SECTION 01 OF 03 WINDHOEK 000432 
 
SENSITIVE 
SIPDIS 
 
AF/S PHAEDRA GWYN PLEASE PASS TO DEPARTMENT OF ENERGY 
PASS TO EEB/ESC/IEC 
 
E.O. 12958: N/A 
TAGS:          
SUBJECT: NAMIBIA ASKS DOE TO REVIEW SALE OF URANIUM TO USEC 
 
 1.  Action request - please see paragraph 9. 
 
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Summary 
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 2. (SBU)  Veston Malango, General Manger of the Chamber of 
Mines of Namibia (CMN), called on Ambassador Mathieu to 
convey his organization's concern over the U.S. Department of 
Energy's plan to sell excess USG uranium to the United States 
Enrichment Corporation (USEC).  Explaining that the DOE sale 
could suppress global uranium prices, Malango emphasized that 
Namibia could ill afford any move that would damage its 
rapidly expanding uranium industry.  Uranium has played a 
critical role in Namibia's weathering the global financial 
crisis by offsetting precipitous declines in other 
commodities, primarily diamonds and copper.  Malango's verbal 
request was accompanied by a formal letter (text included in 
paragraph 7). The Namibian government (GRN), Malango 
stressed, fully supports the CMN letter.  End Summary. 
 
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A Plea for Help 
--------------- 
 
 3. (SBU)  Ambassador Mathieu met with Veston Malango, General 
Manger of the Chamber of Mines of Namibia, at Malango's 
request on November 23.  The CMN represents all (60) major 
mining and exploration companies active in Namibia.  Malango 
delivered an impassioned plea that the USG reconsider its 
announced plan to sell excess uranium to USEC.  Malango also 
provided a formal letter outlining the Chamber's arguments 
against the sale.  He emphasized that the letter had been 
fully cleared by four Namibian ministries (see letter text 
included in paragraph 7).  Malango acknowledged the USG,s 
right to sell its excess uranium reserves.  However, he 
opined that DOE should follow its Excess Inventory Management 
Plan (of December 2008), and/or the manner the USG handles 
its gold Reserves, in order to avoid disturbing international 
markets or negatively affecting the economies of developing 
countries. 
 
-------------------------------------- 
Uranium: Critical to Namibia's Economy 
-------------------------------------- 
 
 4. (SBU)  According to the CMN, uranium should surpass 
diamonds as Namibia's most valuable mineral export by 2010. 
In 2008, uranium mining contributed to over four percent of 
Namibia's GDP, and in 2009 it will likely contribute even 
more.  Namibia has been able to weather the global financial 
crisis and the near collapse of the diamond (and its smaller 
copper) industry primarily based on the increased worldwide 
demand for nuclear fuel and a fortuitous expansion of the 
Namibian uranium industry in recent years.  Namibia jumped to 
fourth amongst the world's largest uranium oxide producers in 
2008, behind Canada, Australia and Kazakhstan reaching a 
total production of just over 5000 tons.  Planned expansions 
could increase the country's output to 13,000 tons of U3O8 
(yellow-cake) per year by 2015.  Uranium exports in 2008 
amounted to $629 million, up 11 percent from 2007. 
 
 6. (SBU) Malango noted that the uranium industry employs 2000 
people, which is roughly the same number of jobs lost by the 
diamond and copper sectors over the past year-and-a-half. 
Malango projects that the industry could add another 7000 to 
8000 jobs if all forecasted uranium projects come on line. 
More modest predictions estimate an employment increase of no 
more than 5,800 jobs, with between three to six new mines 
opening in the next five years.  While some projects may 
never come to fruition, some are all but certain.  France's 
vertically integrated nuclear energy company Areva is on 
track to commission Namibia's third uranium mine, Trekkopje, 
in 2011.  At full capacity, Trekkopje should produce 3,860 
tons of U308 per year and employ 1,100 workers. 
 
 
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Chamber of Mines' Letter 
------------------------ 
 
 7.  (SBU)  Begin Text 
 
November 20, 2009 
 
Her Excellency Dennise Mathieu 
USA Ambassador to Namibia 
Embassy of USA 
 
WINDHOEK 00000432  002 OF 003 
 
 
Windhoek 
 
Your Excellency, 
 
(Subject) US Department of Energy Imminent Sales of Excess 
Uranium Inventory 
 
It has come to the attention of the Chamber of Mines of 
Namibia that the US Department of Energy has announced plans 
to "transfer large quantities of excess government uranium to 
the United States Enrichment Corporation (USEC) on a 
non-competitive basis." 
 
We are concerned that if this is implemented in the manner 
that it has been announced, it will no doubt impact 
negatively on the price of uranium, with major ramifications 
on the uranium mining industry of Namibia and corresponding 
reductions in the state revenue to the Government of the 
Republic of Namibia. 
 
To put things in perspective, Namibia is now a major world 
producer of uranium, contributing about 10% (percent) to 
world production.  In 2008, Namibia rose to 4th (fourth) rank 
as the World producer of uranium, from the 6th (sixth) 
position.  With more uranium mines coming on stream (two 
mines are currently under construction), Namibia is poised to 
play a major role as a significant world producer of uranium. 
 This will translate to increased GDP, mineral exports, tax 
revenue to the government and employment. 
 
The diamond industry has been the backbone of the Namibia 
mining industry for many years.  However, due to depressed 
mineral commodity prices brought about by the global 
financial meltdown, the diamond industry has been badly 
affected resulting in production holidays, reduced production 
in line with demand and loss of jobs / reduction in labour 
force with resultant social consequences and reduced income 
to Government coffers. 
 
Luckily, the uranium industry remained resilient in these 
depressed market conditions and continued to grow and offset 
the negative impacts suffered by the diamond industry. 
 
Your Excellency, the planned sales of excess uranium 
inventory by your government has the potential to wipe out 
all the gains attributable to the Namibian uranium industry. 
 
The purpose of this letter is to appeal to your Government, 
through your good offices, to reconsider the matter so that 
this is not in a manner that will adversely affect the 
uranium markets. 
 
The Chamber of Mines of Namibia has brought this matter to 
the attention of the Government of the Republic of Namibia 
through the Minister of Mines and Energy. 
 
We are fully mindful that the USA government does not wish to 
harm economies of developing Countries such as Namibia.  Our 
appeal, therefore, is to warn of unintended consequences of 
such a move. 
 
Your Excellency, we respectfully request your good offices to 
prevail on your government to review the method of the 
planned sales of excess uranium inventories so as not to 
distort the market and safeguard our uranium mining industry 
and the Namibian economy from further distress in addition to 
repercussions already suffered as direct consequence of the 
global financial crisis. 
 
The Chamber of Mines of Namibia wishes to present Your 
Excellency, assurances of the highest order and is ready to 
provide your office with any additional information as may be 
needed. 
 
 
Yours sincerely, 
 
(Signature) 
 
Mike Leech 
President - Chamber of Mines of Namibia 
 
CC.: Hon. Erkki Nghimtina, Minister of Mines and Energy 
Hon. Dr. Hage Geingob, Minister of Trade and Industry 
Hon. Saara Kuugongelwa-Amadhila, Minister of Finance 
Hon. Marco Hausiku, Minister of Foreign Affairs 
Mr. Joseph S. Iita, Permanent Secretary, Minister of Mines 
and Energy 
 
WINDHOEK 00000432  003 OF 003 
 
 
Ambassador Veiccoh Nghiwete, Permanent Secretary, Minister of 
Foreign Affairs 
H.E. Mr. Patrick Nandago, Ambassador to the United States of 
America 
 
End Text. 
 
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Comment 
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 8. (SBU) In a country with a total population of 2 million 
that is battling 37 percent unemployment, the Namibian 
uranium sector has provided many needed jobs and contributed 
significantly to Namibia's tax revenue base.  Although 
officially classified as a middle income country, Namibia's 
income disparity is among the most acute in the world.  As a 
result, Namibia has many of the characteristics of least 
developed countries. 
 
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Action Request 
--------------- 
 
 9. (SBU) Post is aware that DOE released a report on November 
5 titled "Quantification of the Potential Impact on 
Commercial Markets of DOE's Transfer of Natural Uranium 
During the Period October 2009 Through December 2013."  Post 
is also aware that, on November 12, DOE Secretary Steven Chu 
made a "final determination" that the proposed uranium 
transfer would not have an "adverse material impact on the 
domestic uranium industries."  Post would appreciate a 
written response to the Chamber of Mines' letter, or talking 
points to explain the USG's position regarding the sale of 
excess uranium inventories. 
MATHIEU