Antinuclear

New Olympic Dam uranium mine unlikely to make any money from uranium

The Olympic Dam expansion would cost tens of billions of dollars, and BHP Billiton may want to secure more than longterm contracts to move forward with the expansion

URANIUM  Olympic Dam Expansion Has Doubters But China May Hold the Cards. – Nuclear Intelligence Weekly, 27 Oct 11,   . While BHP Billiton’s recent statements have indicated a willingness to proceed with the expansion of the Olympic Dam copper, uranium and gold mine, sources throughout the uranium industry are skeptical the project will ever come to fruition…….

An expansion would boost annual uranium production capacity from the current 4,500 metric tons of U3O8
(3,392 tU) to 19,000 MT U3O8 (16,112 tU). But after conducting a thorough outside analysis of the project, the producer said he concluded “it never ever makes money.”

BHP Billiton has certainly given mixed signals about the project. Almost simultaneous to its early 2009 submission of an
Environmental Impact Statement (EIS) for the expansion, the company slashed the number of workers on the project from 260 to 60 — the bare minimum needed to keep the regulatory approval process in motion (NIW Jan.26’09)…..

observers throughout the uranium industry remain skeptical. Among other things, they ask how much of this $1.2 billion
will actually be spent in the next year or two. Moreover, there are signs from both inside the company and from its public statements that the project is still very prospective…… “I don’t think BHPB [BHP Billiton] likes uranium,” one uranium
mining expert familiar with the project told NIW in an email. It’s a “troublesome commodity” that consumes executive
management time and “it represents less than 5% of its revenues.”…..

The expert continued that it could be possible to proceed with the expansion without uranium production from the open
pit mine. If the project were to go ahead “entirely without uranium, 10% of the copper production would be sacrificed, but capital costs and management hassle would be less,” he wrote……

there is an intermediate case, continued the expert, “of removing copper from uranium concentrates without continuing to process uranium to end product yellowcake.”..

Were the project truly to ramp up to 19,000 tU, this would be more than double the production of even the most
ambitious projects currently proposed anywhere else in the world. And most agree that it would push down the price to levels where only the lowest cost production centers in Kazakhstan and Canada would remain economic…..

The Olympic Dam expansion would cost tens of billions of dollars, and BHP Billiton may want to secure more than longterm contracts to move forward with the expansion. By so publicly proclaiming its progress on the project, the miner may be making an opening bid for equity investment from potential customers. The question then becomes: Will the Chinese bite?

October 27, 2011 - Posted by Christina Macpherson | business, South Australia, uranium | South Australia