TORO Energy and Cameco have passed major milestones in the past week in their planned development of new uranium mines in Western Australia, as Prime Minister Julia Gillard talked up the prospect of uranium sales to India.
While Toro and Cameco are continuing to work on their projects, the low uranium price has cast doubt over their commercial viability.
Environment Minister Bill Marmion gave the green light last week to what could be WA’s first uranium mine, Toro Energy’s Wiluna project, following an extensive approvals process.
Toro is targeting 2014 for first production, subject to federal government approval of the project and a final investment decision from its board.
Meanwhile, Canadian-based producer Cameco has achieved a major breakthrough in its proposed Kintyre project, signing an agreement with the Martu traditional owners to develop uranium deposits in the Pilbara region.
The approval of Toro’s Wiluna project, forecast to produce approximately 1.8 million pounds of uranium oxide concentrate per annum in its first 10 years, is a significant development in the often fiery debate over uranium mining in WA.
The Barnett government overturned a ban on uranium mining upon taking office in 2008, sparking protests from conservation and anti-nuclear groups.
With Ms Gillard holding talks in New Delhi this week on the potential sale of uranium to India, critics have raised concerns about both environmental risks and nuclear weapons proliferation.
The issue has divided the federal Labor Party, with a number of senior ministers fervently opposed to the party’s 2011 decision to allow India to purchase Australian uranium.
Ms Gillard, who met Indian Prime Minister Manmohan Singh and members of the Indian cabinet during a three-day visit, told reporters that any uranium agreements would be negotiated on the basis that it was “only used for peaceful purposes”.
India is not a signatory to the Nuclear Non-Proliferation Treaty.
Toro managing director Greg Hall said in a statement that forecasts of uranium shortages from 2015 would fuel Indian demand for Australian production.
“While the federal government’s proposed opening of the Indian market adds another potential future customer base, it also adds an additional country which could invest in uranium projects in Australia through JV opportunity or financing,” Mr Hall said.
“Toro’s Wiluna Project would be one of the few uranium projects approved on a global basis capable of producing into this medium-term horizon.”
Cameco is believed to have been in negotiations with traditional owners for several years in its bid to gain approval for the proposed Kintyre project.
The Martu people were granted native title to 130,000 square kilometres of land in the Pilbara region in 2002, the single largest determination at the time, after several years of negotiation.
Western Deserts Land Aboriginal Corporation chairman Teddy Biljabu said the project would give the Martu people greater economic opportunities.
“Never before have Martu people been able to negotiate for such strong terms over the life of a project,” Mr Biljabu said in a statement.
“The Kintyre Agreement opens the door to a range of business, employment and cultural initiatives, which ensure Martu have a strong stake in the future of the development.”
Mining giant Rio Tinto first discovered uranium deposits in the region in 1985 but opted to put the deposits to auction in 2007.
A joint venture comprised of Cameco, holding a 70 per cent share, and Mitsubishi Development (30 per cent) paid $US495 million for the rights to the Kintyre project the following year.
The project is in the feasibility stage, expected to be completed by early 2014, with Cameco admitting in its 2012 second-quarter update that the economics of the project were “challenging”.
The uranium spot price has fallen from a June 2007 record of $US138/lb to just $US45/lb at last count.
Cameco’s prefeasibility study indicated the Kintyre project would require an average realised price of about $US67/lb to break even, at its base case production rate of about 6 million pounds per year. A production increase to about 9 million pounds per year would be required were the spot price to remain around current levels.
Cameco added to its WA uranium assets in August when it bought one of the world’s largest deposits, the Yeelirrie project, from BHP Billiton for $US430 million.
