ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter

West Australian uranium mines win approval as prices rise

As output slows elsewhere, Australia's export market has big potential

An exploration drill rig at Kintyre, Cameco's other approved uranium mine site in Western Australia. (Courtesy of Cameco Australia)

SYDNEY -- Canadian uranium mining giant Cameco Corporation has won approval for a big new mine known as Yeelirrie in Western Australia, bringing to four the number of projects in the Australian state that are ready to swing into production if world uranium prices continue to improve from a 12-year low reached in November 2016.

Australia is the world's third largest uranium producer, behind Kazakhstan and Canada. It has no nuclear power industry of its own and exports its entire uranium output, primarily to nuclear power station operators in Japan, China, South Korea, Taiwan, Europe and the U.S.

Cameco's Yeelirrie uranium project site is about 650 km northeast of Perth, in the Goldfields region of Western Australia. (Courtesy of Cameco Australia)

The Liberal National government in Western Australia, which faces a state election on March 11, approved the Yeelirrie uranium project, 650km northeast of the state capital Perth on Jan. 16. It follows similar state approvals in the past month for two other uranium projects -- Vimy Resources' Mulga Rocks and Toro Energy's Wiluna.

Cameco, the world's biggest listed uranium producer, earlier won federal and state approval in 2015 for another uranium project known as Kintyre, about 750km north of Yeelirrie in the East Pilbara region. Cameco's partner in Kintyre is Japan's Mitsubishi Development.

Cameco bought 100% of the Yeelirrie project in the state's Goldfields region from BHP Billiton in 2012, paying $430 million for a mine that will have an operational life of 18 years. But since then, it has held back the project amid unfavorable market conditions in the uranium industry.

Conditional go-ahead

Western Australia's state Environment Minister Albert Jacob gave Yeelirrie a conditional go-ahead despite a recommendation against approval from the state's Environmental Protection Authority, which warned of a potential threat to tiny prawn-like subterranean creatures known as stygofauna and troglofauna that live in the area.

Cameco Australia managing director Brian Reilly. (Courtesy of Cameco Australia)

Cameco Australia's Managing Director Brian Reilly said state government approval was a "significant step forward" and that the company was taking prudent steps to prepare the Yeelirrie project for "improved market conditions."

Yeelirrie's measured and indicated resource base is 127.3 million pounds of U3 O8 (a mixture of uranium oxides known as yellowcake), making it one of the largest potential mines in Australia.

As yet, no uranium mines operate in Western Australia, and the opposition Labor Party opposes uranium mining. But the party has said that if it wins office in the March state election, it would not overturn approved projects because of the damage it could do to investment risk perceptions.

Australia has four operating uranium mines: one in the Northern Territory, where Rio Tinto subsidiary ERA will close its Ranger mine in 2021; and three in South Australia, where BHP Billiton has its Olympic Dam mine, Heathgate Resources runs the Beverley mine and Quasar Resources has the nearby Four Mile mine. A fifth mine, Honeymoon in South Australia, was mothballed in late 2013 but may reopen if prices improve.

Globally, uranium was among the worst performing energy commodities of 2016, with spot prices dropping 40% to hit a 12-year low in November of $18 a pound. So far this year, prices are up about 20% to $23 a pound, according to U.S.-based industry forecaster Ux Consulting. That is prompting miners in Australia and elsewhere to consider which projects might become viable in a rising market.

Still, current prices are a far cry from 2007, when uranium soared above $130 a pound on expectations of a nuclear power bonanza driven by energy demand in emerging markets such as China and India.

That scenario came crashing down after the March 2011 Japanese tsunami and disaster at Tepco's Fukushima Daiichi nuclear power plant prompted Japan to suspend all 54 of its electricity-generating nuclear reactors, and many other countries to review their nuclear power strategies. Three reactors in Japan have since resumed operations, but nuclear power's share of the country's energy mix is considered unlikely to return to the 30% level that prevailed before Fukushima.

While Australia has the world's largest known recoverable uranium deposits with 29% of the global total, it accounted for only 9% (5,654 metric tons) of annual production in 2015, well behind Kazakhstan's 39% (23,800 metric tons) and Canada's 22% (13,325 metric tons), according to the World Nuclear Association. Niger ranked fourth with 4,116 metric tons, followed by Russia with 3,055 metric tons.

Kazakhstan's known resources represent 13% of the global total, followed by Russia and Canada with about 9% each.

Kazakh production cut

On Jan. 10, Kazakhstan surprised the market when state-owned producer Kazatomprom said it would cut output by 10%, or about 2,000 metric tons, this year. Prices immediately rose on the news.

Saskatchewan-based Cameco Corp. said on Jan. 17 it had delivered 31.5 million pounds of uranium, in line with expectations, at an average realized price of 54.46 Canadian dollars per pound in 2016. But it noted it would cut 10% of the workforce, or 120 jobs, at three of its Canadian mines -- McArthur River, Key Lake and Cigar Lake. Cameco CEO Tom Gitzel said this action was necessary in a market that had "remained weak and over-supplied for more than five years."

Boulders are a feature of the landscape at the Yeelirrie project site, 650 km northeast of Perth. (Courtesy of Cameco Australia)

Australian uranium output in the year to June 2017 is expected to be about 7,000 metric tons, according to figures in the federal government's latest resources and energy quarterly outlook released in early January. The Australian industry is hoping to lift output in 2017-18 to as much as 7,850 metric tons, to meet what it hopes will be increased demand as more nuclear power plants come on line in China, India, South Korea, Russia and South America.

According to the World Nuclear Association, there are more than 440 nuclear reactors now operating worldwide, with at least 60 more under construction in 15 countries, as of April 2016. Of those 60 projects, 23 are in China and another six each are in India and Russia.

Australia has been exporting significant amounts of uranium for more than 30 years, though some state governments have been against it. Political opposition began in the 1970s, when anti-nuclear activists, environmentalists, Aboriginal groups and unionists led bans and blockades against the Ranger mine in the Northern Territory, and against ships carrying yellowcake.

In 1983, the Roxby Downs mine -- now known as Olympic Dam -- in South Australia became a focus for protests, but these did not prevent its operation. Since 2005 it has been owned by BHP Billiton and is the single largest known uranium deposit in the world.

In the Northern Territory, activists and local Mirarr traditional indigenous land owners had more success opposing the Jabiluka mine that adjoins Kakadu National Park. It was built but has never operated and is subject to a long-term care and maintenance agreement. Rio Tinto's subsidiary ERA has said Jabiluka will not be developed without approval from the traditional owners.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media