RANDFONTEIN (miningweekly.com) – As gold producer Sibanye Gold moved to optimise its gold resources through the incremental increase in production of uranium, the company could position itself to take advantage of a growing global uranium industry.

With existing underground and surface infrastructure in place at its newly acquired Cooke 3 and Cooke 4 shafts, its Beatrix West Beisa operation and the West Rand Tailings Retreatment Project (WRTRP), the miner could potentially produce 1.5-million pounds of uranium oxide (U₃O₈) by 2022, Sibanye senior VP for organisational effectiveness Robert van Niekerk said on Wednesday.

Amid the producer’s extensive gold reserves and resources, the company had uranium reserves of 102.8-million pounds and resources of 282.3-million pounds across its underground projects at Cooke, Beatrix and the Wits Gold portfolio, as well as its tailings storage facilities at Cooke, Kloof and Driefontein.

Speaking at an investor day at the group’s Sibanye Gold Academy, in Randfontein, he noted that this could enable the company to assist in meeting the increasing demand for uranium on the back of rising nuclear energy consumption amid the uncertainty of potential new production facilities and depleting secondary supply sources that were threatening to send the supply side into a crisis.

As secondary supply sources, which had been “filling the gap” between consumption and primary production, started to “dry up”, the current low uranium price was leading to the closure of operations and the cancellation and deferral of uranium mining projects worldwide and leaving many operations unsustainable.

Van Niekerk explained that the after-effects of the Fukushima disaster, which saw Japan’s nuclear reactors idled and resulted in a pause in projects as many countries reconsidered their own build programmes, as well as little pressure for new supply, had left uranium’s near-term pricing in jeopardy.

However, in the medium-to longer term, Sibanye believed the market looked strong as the price movement was driven by a change in sentiment towards Japan’s imminent restart of its reactors.

The company expected that the market would be “a lot better” by the time its Beisa project edged into production in three years’ time.

With the demand for uranium driven by ever-increasing global energy and electricity consumption – 11% of which was powered by nuclear reactors – nuclear power could play a significant role.

Demand for uranium was expected to increase 48% by 2023 and another 23% over the decade thereafter.

Further, by 2022, there are expected to be 521 commercial nuclear power reactors globally, compared with the current 430 operational reactors and 60 reactors that were currently under construction.

While Sibanye’s uranium growth strategy was a “logical development” of an existing position, the company had not yet entered into any offtake agreements until it could secure a premium price contract, nor had the company sold any uranium.

About 85% of global uranium supply was locked in private, more lucrative, longer-term, multiyear agreements at $45/lb, as opposed to the traditional spot market generally governing other commodities.

Sibanye planned to sell 60% of its uranium through multiyear agreements, with the remainder to be sold on the spot market, where Van Niekerk believed the prices, which stood at about $28/lb on the spot market, would improve.