Uranium Long-Term Contract Price On The Rise

Published on Wednesday May 30 2012 (AEST)  

For the first time since the Fukushima nuclear disaster in March of last year, the long-term uranium price is showing signs of life.

According to trade publication Ux Consulting, the term price rose to US$61.50 a pound this week, up 2.5% from US$60.00. Ux’s long-term price covers material that will be delivered more than two years in the future.

While there have been some minor upticks in the spot price since Fukushima, this is the first time that the term price went up since January of 2011, when the outlook for uranium was much stronger than it is today. Active buyers are ignoring the spot market right now and are focusing on deliveries into the future, industry publication TradeTech said.

Versant Partners analyst Rob Chang wrote that the likely catalyst for the price uptick came from the Japanese town of Ohi, where the local government recently voted 11-1 to restart the town’s two nuclear reactors. “Many view the restart of some of Japan’s 50 idled nuclear reactors as a major positive catalyst for uranium,” he wrote in a note.

Mr. Chang also pointed out that while the spot price is watched closely, the long-term price is the important one for uranium suppliers and buyers, as the vast majority of material is sold in long-term contracts.

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No Extension For BHP Billiton Olympic Dam Uranium/Copper Mine In Australia

Published on Tuesday May 29 2012 (AEST)  

 Down under...Olympic Dam's shaft now reaches a depth of about 760m and it has a 200km underground road network.

Unless some evidence of construction work has been made by year end on the programmed $33 billion expansion of the Olympic Dam copper and uranium mine project, it is likely that Australia might revoke the right to proceed it had given to mine owner and developer BHP Billiton Ltd. "I will not be granting an extension to BHP," Tom Koutsantonis, South Australia's minister of mining, said in Bloomberg News, noting an extension could only be considered if BHP Billiton Ltd. had somehow started doing physical work and mining on the site. "I expect there to be evidence that they've begun mining." 

 In October 2011, the Federal and South Australian governments gave BHP Billiton Ltd. the environmental approval to proceed with its plan to expand and develop the Olympic Dam mine which is seen to yield copper and uranium oxide production by more than quadruple to about 750,000 tonnes and about 19,000 tonnes, respectively, every year. 

 

But just over a week ago, BHP Billiton Ltd.'s very own chairman, Jacques Nasser, declared the company will be safekeeping the $80 billion it had earlier planned to invest on new mining projects by 2015, owing to the dismal prices of commodities prevailing in the world markets today. The deferral could likely affect the Olympic Dam copper and uranium mine project, said to be the world's fourth-largest copper and gold deposit and the largest known uranium deposit. Located north of Adelaide, it is expected to contribute to Australia's cash coffers an estimated $45 billion annually over the next 40 years once completed. . 

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Underground Borehole Mining at the Hansen Deposit - Simulated.

Published on Wednesday May 23 2012 (AEST) 

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Toro Energy Wins EPA Green Light For Wiluna Uranium Project

Published on Monday May 21 2012 (AEST)  

The first uranium mine in Western Australia is a step closer after the Environmental Protection Authority gave the project the go-ahead. South Australian miner Toro Energy is seeking to develop the mine at Wiluna, about 550 kilometres north of Kalgoorlie. 

The proposal has been in the pipeline since the WA Government overturned a ban on the practice in 2008. Toro's managing director Greg Hall says his company has consulted widely with the community. "The process with traditional owners has been quite a long one," he said. 

The mine is expected to operate for 14 years and produce up to two million tonnes of mineralised ore and 1,200 tonnes of uranium oxide concentrate each year. The EPA's chairman Paul Vogel says there will be little risk to those living nearby. "The exposure to radiation for those communities near Wiluna is very, very low," he said. 

Dr Vogel says the uranium will be trucked in sealed containers to the South Australian border, past Kalgoorlie, and shipped out from Port Adelaide. "We paid particular attention to that knowing that the community was particularly concerned about that," he said. 

Greens Senator Scott Ludlum says the authority's decision suggests it has failed in its role. "If creating a permanent carcinogenic hotspot in the north-east Goldfields that will still be carcinogenic thousands of years in the future, then something has gone wrong with the EPA," he said. Dr Vogel says the Toro project will be subject to the most rigorous monitoring program possible, overseen by the radiological council and the Department of Health. "My understanding is there will be financial assurances required, there will be monitoring requirements to meet the trigger levels," he said. "And, if those trigger levels are exceeded, then the Department of Mines and Petroleum will ensure those standards are met over time." Senator Ludlum says he expects Toro to face an uphill battle to get the project up and running. "I think given the state of the world market that is still trying to work out the consequences of the ongoing disaster in Japan where all nuclear reactors are currently closed, I don't think Toro has a chance in hell of bringing this project to market," he said. 

The Opposition's Bill Johnston says WA Labor remains opposed to uranium mining but, if Toro is granted final approval before the election, it will not stand in the way of its development. "The Labor Party's decision is that if final approval has been given to a mine before the election then we would honour those final commitments," he said. 

The mine is expected to generate 350 jobs during the construction phase and 170 once it is operational. Mr Hall says he hopes Toro can make a final investment decision by the end of the year. "We now will await the decision by the Western Australian Minister," he said. 

"The recommendation is open for appeal for a two week period and the Minister will decide on a course of action beyond that." Toro's application now needs to be approved by the state's Environment Minister Bill Marmion before being passed on to the Commonwealth for federal approval. .

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Replacing Nuclear With Wind Power: Could It Be Done?

Published on Saturday May 12 2012 (AEST)  

Many people would like it to be theoretically possible to replace nuclear power with wind power, since the wind is a free resource. The way that I would like to approach the topic is to not discuss the source of power, but to discuss this question from the perspective of “intermittency.”

Stating the question another way: Can an intermittent source replace a baseload power source for producing electricity? This question has nothing to do with how the electricity is generated, but everything to do with when the electricity is generated. The production of electricity involves understanding concepts such as capacity, capacity factor, and generation. 

These three concepts are often misunderstood and misused when comparing the generation of intermittent electricity with baseload generated electricity. It is sometimes useful to use a familiar analogy when explaining complicated topics. I will, therefore, use the automobile for this analogy, since many of us own a car and everyone is familiar with them.


 Capacity 

Here is the analogy: Suppose there is a car on the market that is very environmentally friendly. Its mileage is phenomenal! I call it a “super-green” car. This super-green car has the same horsepower as a conventional car. It will handle steep hills as well as a conventional car. It has the same 0 to 60 mph performance. The only difference is that when you try to start it in the morning, it will only start 25 percent of the time, and you can never predict on which day it will start. It runs, randomly, 25 percent of the time. Would you replace your conventional car with a super-green car to get you to work every day? To keep the analogy simple, let us assume that if the car starts on a particular day, it will also take you home at the end of the workday. If it doesn’t start on a particular day, however, it won’t start that day no matter how often you turn the starter key. To most people, the answer is obvious. Most of us would not hold on to a job very long if we randomly showed up at work only 25 percent of the time. So the answer is no, the super-green car cannot replace the conventional car. Horsepower is the equivalent of capacity in this analogy. An intermittent electrical power source with a capacity (or power capability when it is working) to generate 1000MW cannot replace a conventional power plant with a capacity of 1000MW. Even though the capacities are the same, the power plants are not equivalent. Yet capacity comparisons are made all the time, as if this somehow makes the power plants equivalent. They are not equivalent. 

Capacity factor 

Others would say that since the capacity factor is 25 percent (the car works 25 percent of the time), you would just need four cars to reliably get you to work every day. This is also not true, however. There is a chance that none of the cars will work on a particular day. As a matter of fact, this probability can be computed, if the probability of each car not working is independent of the other cars not working. It is 0.75 x 0.75 x 0.75 x 0.75 or (0.75)^4, which is equal to 32 percent. So if you owned four super-green cars, the probability of none of them working on a particular day is 32 percent. So, with four super-green cars, you get to work 68 percent of the time, which is better than 25 percent of the time, but it is still a long way from 100 percent of the time. Another problem with using capacity factor as an equalizing parameter is that there are times when more than one car will start. The extra cars, however, are of no value to you as far as getting to work is concerned. The extra working cars do not average out with the demand to get to work on time each day. They are working at the wrong time. Note that in the case of a wind farm, the probability of each turbine not working is not independent. If the wind doesn’t blow in a particular area, it will affect all wind turbines. The probabilities are not randomly independent. Therefore, wind farms must be in separate weather patterns, in order to significantly reduce the unavailable time.


 Generation 

A better equalizing parameter is generation. When the super-green car works, it generates highly economical miles. That parameter has its problems as well, however. The generation of economical miles can be increased simply by taking the long route to work. Those extra economical miles are of no value as far as getting to work is concerned. In the same way, generated electricity has no value unless there is a demand for it at the time that it is generated. This is because electricity has zero shelf-life. It must be consumed when it is generated. So, when generation cost comparisons are made between intermittent and baseload power sources, this presumes that the resulting electricity value is the same. This is actually not the case, because electricity generated when the demand for it is not certain does not have the same value as electricity that is generated when there is demand for it. There is no perfect equalization parameter when making comparisons between intermittent and baseload generated electricity. Capacity is by far the worst, next comes capacity factor, and the best is generation, but it is not perfect. 


 Conclusion 

So, the conclusion is that intermittently generated electricity cannot replace baseload generation. Just like there is a chance that none of the super-green cars are working on a particular day, there is also a chance that no electricity is generated by an intermittent source. Hence, all the conventional power sources are still needed. Intermittent power sources can be of value, however, because they do save fuel in conventional power plants. But the economics are usually not very good at today’s fuel prices. In the car analogy, I compute that my 20-mile round-trip commute to work would save me about two gallons of gas a month if the super-green car gets double the mileage of my conventional car. At $4 per gallon, that is $8 per month saving. It is obvious that, from an economic point of view, this saving is nowhere near the hundreds of dollars required per month to own an extra car. Similarly, I wrote an article explaining that wind farms cannot be justified on an economic basis, except in Hawaii, where expensive oil is used to generate electricity. But perhaps using intermittent power plants can be justified environmentally. Perhaps not burning fossil fuels is worth the environmental benefit of not releasing as much greenhouse gases. Also, the fossil resource can be saved for other uses such as plastics. That argument breaks down, however, when the baseload generator is nuclear. Nuclear power does not generate greenhouse gases during operation. Saving the uranium for other uses is not applicable, because uranium has no other commercial uses. What exactly would we be saving it for? So, to answer the general question, can wind power replace nuclear? The answer is clearly no. No technology is perfect, and there is always some impact in everything we do. Nuclear has the capability to meet the electrical needs for humanity for a millennia. That is a very compelling reason to use it, versus using a technology that only works intermittently and requires keeping all the conventional generators that we already have. 

http://cnsti.org/wp-content/uploads/2012/02/Wind-turbines-nuclear-compared.pdf 

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Uranium Prices Should Bottom In 2012-Scotiabank's Mohr

Published on Friday May 11 2012 (AEST)

Scotiabank economist Patricia Mohr says the pullback in commodity prices remains relatively mild with signs pointing to a rebound this month. 

Scotiabank economist Patricia Mohr forecasts that spot uranium prices "may well bottom in 2012, with sentiment and prices starting to recover in 2013 ahead of the expiry of the Russia-U.S. HEU agreement removing 24 million pounds from Western markets." 

In the May 10th edition of the Scotiabank Commodity Price Index, Mohr noted that Japan's Prime Minister "favours a relatively quick restart of Japan's nuclear power (due to the high cost to the economy and industry of imported oil, LNG and coal) and the potential that high electricity prices and shortages may trigger a shift in manufacturing capability overseas.' 

"The Japanese government is expected to unveil proposals for a new energy mix in May 2012," she said. Mohr also observed that the growth markets of China, India, the UAE, South Korea and Russia--"where electricity requirements are huge-will go ahead with substantial nuclear expansion over the balance of this decade, more than offsetting setbacks elsewhere." "Demand for uranium concentrates (U3O3) could grow from 173 million pounds to 225 million by 2020 (3.3% per annum), with significant new mine development required at higher capital costs," she forecast. 

Mohr noted new nuclear reactor construction is expected to resume in China during the second half of the year now that China has completed its nuclear safety review. "In the United States, the Obama Administration remains committed to nuclear energy, though there is stepped-up competition from natural-gas fired power plants," she said. Meanwhile, Mohr suggested that world supply and demand conditions for refined copper "will remain in deficit in 2012. 

While China's consumption growth will slow to 7%, supply disruptions and lower grades continue to inhibit mine output."

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Uranium Spot Price On The Rise US$52.00P/Lb

Published on Tuesday May 08 2012 (AEST)

May 4, 2012 - Four transactions are reported this week in the spot uranium market. The strong increase in mid- and long-term demand witnessed over recent weeks has exerted upward pressure on prices. 

Traders and financial entities remain the most active buyers with utilities beginning to express interest in spot purchases. Sellers, seeking to take advantage of this momentum, have gradually raised offer prices with each successive expression of interest from the buyer side. 

As a result, the gap between willing buyers and willing sellers remains largely unchanged, but with each side at higher price points and transaction activity limited by a lack of price consensus. 

TradeTech’s Weekly U3O8 Spot Price Indicator is $52.00 per pound U3O8, an increase of $0.50 from last week’s value, and up $0.25 from the May 3 Daily U3O8 Spot Price Indicator. 

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Energy Resources Of Australia -ERA Work Begins On Ranger Uranium Incline

Published on Tuesday May 01 2012 (AEST)  

CONSTRUCTION has begun on the $120 million exploration tunnel at the Territory's only uranium mine. Engineering firm Macmahon today started work on the 2.2km decline that stretches 400m into the earth at Ranger 3 Deeps in near Kakadu National Park. 

The project goal is to accurately map the extent of a new uranium oxide deposit, thought to be one of the richest in the nation at 34,000 tonnes. 

Mine owners Energy Resources of Australia are also spending $40 million on a surface drilling project over the next two years. The company has said it will not mine the new resource without the consent of the traditional owners, the Mirarr people, with whom it is negotiating a new mining agreement. 

 

 Chief Executive Rob Atkinson said the construction of the exploration decline marked the start of a challenging and exciting transition for the company. 

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