Thursday, June 14, 2012

Uranium Supply In Focus As Reactors Poised To Come Back

Published on Thursday June 14 2012 (AEST)

THE impending restart of two Japanese nuclear reactors this month and the expectation several new nuclear power plants will come on line in China, India and Russia between now and 2014 is putting the focus on global uranium supplies. 

The search is on for high-grade uranium sources ahead of a possible supply shortage in 2014, with Africa, Central Asia and parts of South America all deemed promising. For now, though, the biggest uranium producers are in Kazakhstan, Canada, Australia, Namibia, Niger and Russia. According to the World Nuclear Association, global consumption of uranium last year was about 69,000 tonnes, of which about 80 per cent came directly from mines. The remainder came from secondary sources such as commercial stockpiles and from decommissioned nuclear weapons. 

Under a 20-year agreement between the United States and countries of the former Soviet Union, military-grade highly enriched uranium in down-blended form is sent from Russia to the US, for use by power utilities there.This agreement, which expires in 2013, saves the equivalent of about 10,000 tonnes of mined uranium a year. According to Alexey Grigoriev, director-general of Tenex, the export arm of Russia’s state atomic energy corporation Rosatom, uranium extracted from Soviet-era nuclear missiles “lights up every 10th bulb in the US.” Last week in Moscow, Tenex signed an agreement with Rio Tinto’s Energy Resources Australia (ERA) to make a trial shipment of Australian uranium to Russia in the third quarter of this year. The uranium will be reprocessed and then re-exported as enriched uranium hexafluoride to an overseas power utility. 

 While ERA’s Ranger mine and BHP Billiton’s Olympic Dam are significant global suppliers from Australia, the world’s single biggest mine is Cameco’s McArthur River mine in Canada, which produced just under 8500 tonnes of yellowcake in 2011. Other large mines are Rossing in Namibia and Krasnokamensk in Russia. Niger’s 5000-tonne a year Imouraren mine, operated by French state-owned nuclear giant Areva, is expected to begin producing in 2014. Cameco is also the operator and 50 per cent owner of Cigar Lake, the biggest undeveloped source of high-grade uranium in the world. The mine, in Canada’s Athabasca Basin, was due to begin production in 2011, but floods in 2006 and again in 2008 delayed that. First output is now expected in 2013, with full production by 2017. 

Cameco’s partners are Areva, the Japanese power company Tepco and energy company Idemitsu. If Cigar Lake, Imouraren or other large mines suffer further delays, junior miners such as South Australia-based Toro Energy stand to play a role in the global supply chain. Late last month, Toro Energy won an approval recommendation from Western Australia’s environmental protection authority for its Wiluna uranium project, about 950km northeast of Perth. That should roll through into approvals from state and federal environment ministers later this year, though an agreement with the local indigenous community is also required. At the World Mining Investment Congress in London recently, Toro’s managing director Greg Hall outlined the game plan for Wiluna, which involves trucking yellowcake from the West Australian desert to Adelaide. Hall said the company hoped to be in production by 2014, with annual output of 1.8 million pounds a year at a cash cost of $30 a pound. 

Uranium currently sells for $51 a pound, or about $112,000 a tonne. Hall said Toro had been talking to Asian customers and potential equity partners for some time. The company’s finance target is $200 million of equity and $100 million of debt to get its projects up and running. Hall said Wiluna was just a tenth the size of the world’s biggest mines, but global supply was limited and operations such Toro’s filled a niche. He said there was a big debate in Japan about the future role of nuclear power there, but it was “costing the earth” for Japan to import LNG and coal to run its power stations. Prefectural authorities are expected to give the green light this week to restart two of Japan’s 50 idled nuclear reactors. They are at Oi, in Fukui prefecture on the west coast of the country. 

Power from the Oi plant is needed for the heavily populated Kansai region around Osaka as Japan prepares for the (northern) summer season, when power consumption soars. Last Friday, Japanese Prime Minister Yoshihiko Noda said nuclear power was vital for Japan’s energy needs, and urged the restarting of the Oi No. 3 and No. 4 reactors.


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