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Monday
Jun272016

BHP: Fukushima set uranium industry back for years

Chart courtesey of u308.biz

A key reason for BHP Billiton’s decision four years ago to indefinitely mothball a $30 billion plan to turn Olympic Dam into the world’s biggest uranium mine was the Fukushima nuclear plant explosion rather than cost concerns, it has been revealed.

Senior BHP executives told The Australian that although lingering effects from the global financial crisis in 2008 were used to publicly justify the 2012 decision by BHP’s board not to proceed with the original expansion plan, the real concern was the effect of the Fukushima disaster on demand for uranium and its price.

“You have to consider the events that occurred around that time ... Fukushima changed everything and probably set the nuclear energy and uranium industry back years, if not decades,” one senior BHP executive said.

Uranium prices had risen as high as $US130 a pound in the years before Fukushima, driving a plan to create the world’s biggest open-cut mine at Olympic Dam, 570km north of Adelaide, which holds the world’s largest uranium deposit under more than 400m of dirt and rock.

But the Japanese tsunami in March 2011 sparked a partial nuclear meltdown at a power station in Fukushima province, reviving fears about the safety of nuclear power. Japan turned off its 50 nuclear reactors and other nations, such as Germany, announced plans to phase out nuclear power completely, while Switzerland, Belgium and Italy moved away from nuclear power and new reactors in Britain and the US faced stronger community resistance.

Other countries looked at Fukushima as a reason to change regulations, which has stalled the development of additional reactors, with China ordering a three-year hiatus in allowing any nuclear reactor project to be developed. By August 2012, BHP had shelved its expansion plans, which had been seven years in the making with federal and state environmental approvals in place.

Four years on, the uranium industry remains in a downturn, justifying the board’s decision, with the benchmark price this year at about $US28.

Olympic Dam asset president Jacqui McGill told The Australian during a tour last month of the mine that copper was her focus, although the mine still produced about 4,500 tonnes of uranium a year. In the large southern area of the mine, 70 per cent of the resource remains untouched.

Some experts think an eventual worldwide shortage of uranium will create a future price boom, which BHP hopes to cash in on with the development of new “heap leach” technology in Adelaide to cheaply extract the deep reserves of uranium it holds at Olympic Dam.

But the miner is in no rush and the technology, which would result in a cheaper, slower and smaller extraction of uranium than the original expansion plan, is at least three years away from being proven. In heap leaching, uranium is dissolved from crushed ore stacked in piles.

“I think in Australia we have to realise that for our businesses to be successful they have to be globally competitive, and I know certainly in South Australia there was a lot of disappointment in terms of the expansion. But the reality is the world changes, and we have to respond to those economic demands,” Ms McGill said.

In another potential blow to the South Australian government, which had pinned the state’s economic future on the original expansion plan, Ms McGill categorically rejected siting a high-level international nuclear waste repository on any land covered by its indenture agreement.

Much of the Stuart Shelf region of the Gawler Craton — ­considered by experts to have the best geological conditions for a nuclear dump — is on BHP land, parts of which it is unlikely ever to mine.

The Weatherill government is undertaking public consultation, and will decide by the end of the year whether to host a high-level dump, following a royal commission recommendation to pursue a project that could be worth $445bn over at least 70 years.

But despite the potential benefits to shareholders if BHP signed up as a corporate partner, Ms McGill rejected any such proposal.

“We’re a resources company. We’re not a waste repository company, so that’s not in our business model and it’s not in our plans,” she said. BHP had no moral responsibility to manage waste, despite mining and exporting uranium for use in international reactors, she added.

With Cameco flirting with the $10.00 prices level its difficult to see just how low these miners can go.

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