3
07.13
MODERN
M I N I N G
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A
s readers will see,
we give some quite
detailed coverage in
this issue to the Botswana
Resource Sector Conference
held in Gaborone last month (June). Most of
the presentations were on diamonds, coal and
copper but there was also one delivered on
uranium. This was presented by Paul Thom-
son, MD of A-Cap Resources, the Australian
company which holds the Letlhakane urani-
um project south of Francistown. I know Paul
well and was impressed by his account of
Letlhakane (see also page 37), which has the
potential to be turned into a fairly substantial
uranium mine with the ability to produce up
to 3 Mlb of U
3
O
8
annually.
Unfortunately there is a problem with Letl-
hakane. Its operating costs (as estimated in a
recently completed scoping study) would be
US$42/lb in its first five years of operation
whereas the spot price of uranium (as I write
this) is hovering around US$40/lb. This is a
far cry from a spot price of US$72/lb in early
2011 – and an even farther cry from a peak of
US$135/lb recorded in mid-2007 at the height
of the commodities boom.
Letlhakane, of course, is not unique in being
challenged by current market conditions and I
would guess there is scarcely a single proposed
uranium project anywhere in the world that’s
going to be viable in this uranium price envi-
ronment. Most uranium producers would need
a price almost double the current one before
committing to new uranium mines. Indeed I
recall Paladin Energy’s John Borshoff saying in
November last year that Paladin – which has
uranium mines in both Namibia and Malawi
and which recently announced a record an-
nual production of 8,25 Mlb for FY2013 – was
of the view that a price at or above US$85/lb
would be required before Paladin would con-
template any further expansion or new mine
development.
Uranium’s woes have hit the Namibian ura-
nium sector particularly hard and the flood of
positive news that we used to get from com-
panies with projects in the country’s uranium
belt – also sometimes called ‘Alasakite Alley’
– to the east of Swakopmund has slowed to
a trickle, with most proposed developments
(with the notable exception of Chinese-owned
Husab) now effectively on hold. Companies
operating in the area are taking strain and
Deep Yellow, for example, has just announced
cuts in board fees and executive remuneration
(on top of cost-saving measures already imple-
mented last year).
The weakness in the uranium market is
partly attributable to the global slowdown
which has affected virtually all commodities
and resources. But the real damage was done
in March 2011 when a tsunami hit Japan in
the wake of a major earthquake, in the process
damaging – and disabling – the Fukushima
nuclear power station. In response to the di-
saster, Japan closed the bulk of its considerable
nuclear fleet of 50 reactors while Germany an-
nounced that it would close all 17 of its nucle-
ar plants by 2022.
As a result of Fukushima, 2012 was a bad
year for the nuclear power industry – with
nuclear power generation experiencing its big-
gest ever one-year decline.
Why am I telling you all this? Well, they say
the darkest hour comes just before dawn and
it could well be that a dawn for uranium is on
the way. Certainly, I’m seeing more and more
reports suggesting that the uranium price has
bottomed and will soon start to recover with
some analysts predicting a rise to US$70/lb
plus in 2014 and to US$90/lb by 2016.
It’s also becoming clear that while Fuku-
shima was a terrible disaster, the Fukushima
plant stood up remarkably well to the battering
it received. As a recent article by John Watson
in Australia’s
The Age
newspaper comments:
“Let’s be clear, Fukushima was hit by a worst-
case scenario: the world’s fifth-most-powerful
earthquake since 1900, a tsunami twice as
high as the plant was built to withstand and
follow-up quakes of magnitudes 7,1 and 6,3.
… This ‘perfect storm’ hit a nuclear plant built
to a 50‑year old design and no one died. Japan
moved a few metres east during a three-minute
quake and the local coastline subsided half a
metre, but the 11 reactors operating in four nu-
clear power plants in the region all shut down
automatically.”
He adds that none suffered significant dam-
age as a direct result of the tsunami (although
Fukushima, of course, was severely damaged
as a result of the disabling of the plant’s cool-
ing system and the subsequent overheating of
two of the reactors).
Watson continues: “Yet such is the imbal-
ance of dread to risk on matters nuclear that
this accident was enough to turn public opin-
ion and governments against nuclear power.
Never mind that coal mining kills almost 6 000
people a year, or that populations of coal-min-
ing areas have death rates about 10 per cent
higher than non-mining areas, or that coal
emissions drive global warming.”
I know Watson’s views will be controversial
but it is certainly true that Asian countries in
particular seem to have renewed faith in nu-
clear energy. In Japan itself power companies
have applied to restart 12 reactors while China
is pressing on with its plans for a huge expan-
sion of its nuclear power capacity. Although
figures tend to vary according to the source,
the country has around 15 nuclear power-
generating facilities in operation with another
30 under construction. Predictions are that
by 2020 it will be second only to the US and
France in terms of the number of reactors it has
operating.
This is all good news for potential urani-
um producers in Southern Africa and – who
knows – perhaps by next year’s Botswana Re-
source Sector Conference A-Cap’s Paul Thom-
son might be able to give us a more positive
update on Letlhakane than was possible at this
year’s event.
Arthur Tassell
Uranium
ready to reverse?
