Toro takes uranium project by the horns

WESTERN Australia’s uranium market is showing new signs of life with share prices stabilising, prices expected to rise and four major uranium projects currently going through the environmental approval process. 

South Australian-based Toro Energy is the first of four companies to enter the public review phase of the approvals process, for its Wiluna Uranium project in the Mid West.

The company recently released its Environment Review and Management Programme (ERMP) and associated documentation for public review and comment.

Toro Energy managing director Greg Hall said that, despite the Fukushima disaster following the tsunami in Japan this year, energy demand and nations’ desire for energy security from a low-carbon base-load supply would mean continued growth in the uranium industry.

“Most [countries] are restating that nuclear remains a pillar of their energy generation strategy, and even new nuclear countries such as the United Arab Emirates, Turkey and Vietnam are continuing their plan-and-build programs,” Mr Hall told WA Business News. 

Subject to the approvals process and government decisions, Toro Energy expects on-ground construction by late 2012, production by late 2013 and first uranium sales in 2014.

Uranium mining policy in WA has undergone significant changes in recent years, with the Barnett government declaring its support for uranium mining in 2008 and overturning the ban implemented by the previous Labor government.

While there are no commercial uranium mines in WA, the four projects undergoing state and federal approval processes are: BHP Billiton’s Yeelirrie project; Toro Energy’s Wiluna project; Canadian company Mega Uranium’s Lake Maitland project; and the Kintyre project, a joint venture between Canadian uranium miner Cameco and Mitsubishi. 

BHP Billiton says it is continuing work at its Yeelirrie uranium mining project, but has deferred its ERMP to focus on environmental and economic outcomes to meet internal standards. 

BHP also owns and operates the Olympic Dam uranium mine, the largest uranium deposit in the world and one of the three operating uranium mines in Australia.

Its planned $20 billion expansion of Olympic Dam is still going through the approvals process, with the company having released its final Supplementary Environmental Impact Statement in June. 

Mega Uranium and Cameco/Mitsubishi are both in the middle of completing ERMP studies and are planning to submit ERMPs to the Environmental Protection Authority in the next 12 months.

Patersons senior analyst Simon Tonkin said he was optimistic these projects would eventually come to fruition.

“The GFC hurt the funding of these projects and so did Fukushima. I think these projects will come on line but they will take longer than expected,” Mr Tonkin said.

“Toro is probably the frontrunner to bring things into production and Yeelirrie has been pushed back a bit due to the current environment.” 

The uranium price has also suffered post-Fukushima, dropping from $US72 per pound to about $US52.

The phase-out of nuclear power by countries such as Germany and Switzerland has been a factor contributing to the drop in the commodity’s price. 

Following the problems at Fukushima, the German government introduced a nuclear shutdown program where all 17 reactors would be phased out by 2022.

Switzerland has also announced a phase-out of nuclear power reactors, with its three reactors to be shut down by 2030. Post-Fukushima, Japan has shut down two-thirds of its of 54 reactors for maintenance.

Despite this, Mr Tonkin said he was expecting the price of uranium to climb back up to the $US70 mark by 2014. 

“Once this year is out I think things for uranium will be looking better. In the short term the effects of Fukushima will linger but in the longer term we will see deficits from 2014 and prices begin to rise,” he said.

Mr Tonkin said the world’s demand for uranium was also set to increase from 130 million pounds to 205 million pounds by 2020.

WA has a known resource of more than 207,000 tonnes of uranium oxide in about 30 separate deposits, with a total of 212 uranium tenements held across WA by 66 companies.

More recently, uranium companies have expressed their concern in relation to the new 5 per cent royalty on uranium (see next page) and the statement by the WA Labor Party last month that it would enforce its anti-uranium policy should it be re-elected in 2013.

Association of Mining and Exploration Companies chief executive Simon Bennison said Labor’s decision to reaffirm its ban on uranium mining would have a detrimental impact on the state’s sovereign risk and its attractiveness as an investment destination.

Uranium mining is well established in the Northern Territory and South Australia with respective governments seeking to facilitate further investment.

The current policy of the Queensland government allows exploration but prohibits uranium mining and there is a blanket uranium ban in NSW and Victoria.