Two foreign exploring companies — Uranium Resources Plc, a uranium mining company focusing on Southern Africa, and Australia-based Western Metals Ltd — said they had entered “a very exciting phase of exploration” for the mineral, whose world demand is outstripping supply.

The initial reconnaissance drilling at the Mtonya Uranium project has identified uranium hosted in sandstone units similar to those found at neighbouring Malawi’s Kayelekera uranium project.

Industrial sources say the present world demand for uranium is outstripping supply and about a third of annual demand for uranium is being met by declining inventories and Russia’s highly enriched uranium weapons decommissioning.

The Sydney-based Resource Capital Research sees a bullish outlook for the uranium market and has predicted that the uranium price will reach $125/lb this year and may escalate to $140/lb by September 2008.

The major application of uranium in the military sector is in making high profile weapons, whereas its main civilian use is to fuel commercial nuclear power plants. Experts say by the time it is completely fissioned, one kilogramme of uranium can theoretically produce about 20 trillion joules of energy, or as much electricity as 1,500 tonnes of coal.

Currently, 17 per cent of world electricity is generated through uranium, but still its demand is hardly met by the supply. Global electricity demand is growing rapidly. Even with effective energy efficiency programmes in developed countries, the International Energy Agency (IEA) expects global electricity consumption to double by 2030.

If indeed the uranium exploration develops into “full commodity availability,” it will definitely become one of Tanzania’s more important foreign exchange earners, analysts predict.

This prediction is bolstered by the fact that there has been little exploration for 25 years and no new mines built outside Canada for the past 20 years, and that there is not enough uranium capacity to satisfy existing plants — crucially, new uranium deposits need to be put into production now.