China acquires N$1.9bn stake in Langer Heinrich

China has extended its growing influence in Southern Africa by acquiring a 25% stake in Namibian uranium mine Langer Heinrich at a cost of US$190 million (N$1.9 billion). The Asian country acquired the stake through its State-owned nuclear corporation. The deal eases the financial woes of Langer Heinrich’s parent company, Australia’s Paladin Energy, while at the same time tightens China’s grip on Namibia’s uranium, following China Guangdong Nuclear Power Corp’s N$23 billion (US$2.3 billion) acquisition of the Husab project in 2012. The Namibian government yesterday said China’s growing interest in local uranium reserves is a result of private transactions over which the State has no control. “Paladin is a licensed private company. Being a private enterprise, it’s up to them to find suitable investors. We as a government only ensure that such transactions are completed within the confines of the laws of the land,” Mines and Energy Minister Isak Katali told Namibian Sun. China National Nuclear Corp (CNNC) has agreed to buy a 25% stake in Langer Heinrich - a deal which boosts Beijing’s new nuclear plants. CNNC is the bigger of two State-owned nuclear power conglomerates, controlling nine of the country’s 17 reactor units. It is working on an ambitious reactor construction programme to help China ease its dependence on coal-fired power, according to international media reports. “The sale rescues Paladin, as it urgently needed to raise funds following three years of pain as uranium prices slumped after the Fukushima disaster, which killed Japanese demand for the fuel and led other countries to halt nuclear expansions,” Business Recorder reports. “Paladin’s out of the woods for the short to medium-term. But longer-term they need higher uranium prices to pay back their convertible note,” said Simon Tonkin, an analyst at Patersons Securities. Southern Africa has become a battleground for Chinese and Western interest, with the Asian country gaining more trust through its association with former liberation movements, now turned governments, in the region. In a document appearing on the US Air Force Academy website, Dr Stephen Burgess - an associate professor at the US Air War College – urged his country to counter China’s growing penetration in the region. Through their State-owned companies, Namibia and China are partners in the Husab mine. Katali yesterday said Epangelo Mining – which is tasked to acquire stakes in the country’s strategic mineral ventures - did not have the resources needed to buy into Langer Heinrich. “Of course it would have been ideal for them to have acquired the stake, but they don’t have such funds,” Katali said of the heavily under-capitalised Epangelo. Langer Heinrich is in total valued at N$7.6 billion. CNNC’s 25% stake in Langer Heinrich, which has a producing capacity of 5.2 million pounds of uranium concentrate a year, will give it a quarter share of the mine’s output and the option to buy further supplies from Paladin at market rates. “I do believe ... CNNC and Paladin will develop a long-lasting business relationship which is beneficial to each other and also bring long-term influence to the global uranium mining industry,” CNNC director-in-general of geology and mining, Du Yunbin, said in a statement.