With the recent catastrophic events in Japan, particularly the disaster at the Fukushima, uranium companies have seen dramatic drops in their share prices. BHP Billiton is re-considering their expansion of the Olympic Dam copper, uranium and gold mine in South Australia.
Sydney Morning Herald
March 16 2011
AS THE struggle continues to bring the crippled Fukushima Daiichi power plant north of Tokyo back under control, BHP Billiton is weighing up a $30 billion expansion of its Olympic Dam copper, uranium and gold mine.
Copper is the most important metal in the South Australian outback in terms of revenue and profits, but Olympic Dam’s status as the world’s biggest uranium deposit (it is the world’s fourth biggest copper deposit) means that the outlook for uranium is also a vital consideration in BHP’s expansion plans.
A final investment decision – expected early next year – will depend on economic conditions at the time, most notably the outlook on the price of copper.
However, the earthquake in Japan has altered the landscape for uranium. High-growth scenarios for nuclear power are now too bullish and BHP will have to factor in the potential for a stable- to low-growth uranium outlook.
The ability of the world’s nuclear industry to soak up the massive increase in the supply of uranium that would come with an expansion of Olympic Dam is suddenly open to question.
Annual capacity at Olympic Dam is now rated at 235,000 tonnes of copper, 4500 tonnes of uranium and 100,000 ounces of gold. Fully expanded, that capacity rises to 750,000 tonnes of copper, 19,000 tonnes of uranium and 800,000 ounces of gold.
The planned increase in uranium output represents 20 per cent of present world production.
At today’s prices, total uranium output at Olympic Dam would account for about 25 per cent of its revenues. And because of Olympic Dam’s mineralisation, uranium has to be produced (separated from the copper). It is not a case of simply leaving it behind, even if copper prices are such that Olympic Dam would be a big money-spinner on copper alone.
Because of its uranium content, the Olympic Dam expansion project has had to jump through more approval hoops than a standard copper or gold mine.
An environmental impact statement was released in May 2009 and then entered a public comment period, during which 4000 public submissions were received, most of which raised concerns about uranium and its role in the global nuclear power cycle.
BHP was then required to submit a supplementary environmental impact statement that includes responses to those submissions.
The backlash from anti-nuclear groups in response to Japan’s damaged nuclear generators means government clearance of the supplementary environmental impact statement is a hot issue all of sudden.