Nuclear projects on the rise

YELLOW CAKE While South Africa has significant reserves and some uranium projects are under way, the country has to ensure that it is market competitive

YELLOW CAKE While South Africa has significant reserves and some uranium projects are under way, the country has to ensure that it is market competitive

Photo by Bloomberg

4th April 2014

By: David Oliveira

Creamer Media Staff Writer


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Despite significantly lower uranium prices, compounded by the negativity surrounding nuclear energy after the Fukushima Daiichi disaster in 2011, the number of nuclear power plants under construction has risen. This is likely to increase global demand for the commodity, says professional services firm EY mining and metals sector leader for Africa Wickus Botha.

“People are still sensitive about nuclear power, owing to the Fukushima disaster, but several reactors are currently being developed.

“At the time of the Fukushima nuclear disaster, 63 nuclear reactors were under construction. As of 2013, 71 nuclear reactors were under construction, with a total of 72 estimated for this year,” he tells Mining Weekly, adding that the number of nuclear power plant construction projects has doubled since 2007.

Botha believes this is promising for the global uranium mining industry, as demand for yellow cake is set to increase dramatically once these nuclear plants are complete.

“Some of these global projects are scheduled to be operational by 2017, while others may only be operational in 2020. The near-term demand is expected to increase with Japan restarting its idled nuclear power plants. Japan released a draft energy plan, which put nuclear power at the core, in February 2014. Two reactors are scheduled to restart this year, as Japan’s Nuclear Regulation Authority has put them under screening for restart,” he says.

Botha points out that South Africa’s uranium mining sector is not producing much of the commodity, despite having significant uranium reserves in the Karoo basin and Johannesburg’s West Rand, and despite underused processing facilities.

“The uranium circuit at gold major AngloGold Ashanti subsidiary Mine Waste Solutions started commissioning in January 2014, but harsh weather conditions, as well as logistics and safety challenges, were encountered during the fourth quarter of 2013, resulting in completion now being anticipated for the end of the first quarter of 2014,” he highlights.

Botha adds that ASX- and JSE-listed Gold One’s Cooke uranium project is considering recommissioning the Cooke 4 Ezulwini uranium plant to treat uranium ore, which will enable the Cooke underground operations to implement a coproduct mining strategy and, thereby, increase mining reserves and improve profitability. The feasibility study, which targets ore containing economic gold and uranium, has been completed.

“If you consider the South African landscape, there are several uranium development projects currently under way but there is a lot of spare capacity to produce vast quantities of yellow cake. For example, emerging uranium miner Peninsula Energy is doing feasibility work at its Karoo projects, in the Western Cape, and Aardvark Uranium is undertaking advanced exploration at the Namakwa surface uranium deposit in the Northern Cape,” he asserts.

Botha attributes this to the dramatic drop in the uranium price, which has been declining since the commodity reached a record high of $138/lb in 2007, compared with the current price of $35/lb.

Meanwhile, demand for uranium is highest in Asia and Europe, with major producers, such as world production leader Kazakhstan, able to supply yellow cake at a more competitive rate than South Africa, owing to significantly lower logistics costs.

Botha notes that while South Africa does have significant reserves and some uranium projects are under way, the country has to ensure that it is market competitive.

“Currently, the only significant uranium consumer is parastatal power producer Eskom’s Koeberg nuclear power plant. It is clear, however, that the Department of Energy (DoE) is considering adding nuclear power to its electricity expansion programme,” Botha says.

Investment and development advisory firm africapractice associate consultant Sinethemba Zonke adds that South Africa’s proposed new nuclear build programme could be a huge boost for the country’s uranium sector.

“There have been proposals, since February last year, from the DoE to build stations to supply 9 600 MW of power. Further, the declaration of uranium as a strategic mineral by the South African government in 2007 indicates that uranium will play an important role in South Africa’s future energy mix,” Zonke posits.

He argues that the proposed nuclear power station’s uranium requirements could result in a significant increase in uranium production and incentivise investment in new uranium mining developments.

“South Africa will certainly aim to increase imports from other countries – particularly those in Africa, such as Namibia and Niger – as the country’s supplies will not be sufficient to meet the demand. The South African government is intent on ensuring the country’s future energy security, so a local supply base will be of great importance,” asserts Zonke.

He warns, however, that increased government involvement – owing to uranium being classified as a strategic mineral – could result in the Department of Mineral Resources applying various export controls to support local beneficiation and localisation objectives.

This could impact negatively on South Africa’s attractiveness as an investment destination for uranium mining.

Edited by Samantha Herbst
Creamer Media Deputy Editor



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