to boost uranium

http://www.theage.com.au/news/business/bhp-ready-to-boost-uranium/2006/10/26/1161749254071.html

BHP Billiton is ready and willing to cash in on booming uranium prices by gearing up its Olympic Dam operation in South Australia to meet the surge in demand from China and India.

Speaking at the London-leg of the annual meetings last night, chairman Don Argus said that Olympic Dam — the world's biggest known uranium resource — meant the company was "well placed" to supply the uranium that China and India "will require to meet their energy needs".

BHP became a uranium producer with its takeover of WMC last year. Uranium prices have since doubled to $US56 a pound in response to expectations that nuclear power will be part of the solution to global warming.

Mr Argus acknowledged that while sales of Australian uranium to China was now possible under a safeguards agreement, one had yet to be struck with India.

But he said that there were good reasons why booming China and India would look to uranium to be part of their energy mix. While nuclear power remained 60 per cent more expensive than electricity generated from coal — something that BHP also produces in spades — Mr Argus said the cost differential would close as technology developed and market conditions changed.

He said nuclear's higher costs had to be compared with the average cost of non-hydro renewables (wind and solar), which were about 130 per cent higher than coal. Oil remains the most expensive way by far to generate electricity, at more than 160 per cent more than coal.

"If you look at the expected growth in energy consumption from 2001-2050, you can see that compared with the US and the European Union, the energy consumption of India and China is expected to grow dramatically," Mr Argus said.

"It means that access to a whole portfolio of energy sources, including nuclear, will become even more vital for the developing nations," he said.

The meeting follows the release of BHP's first (September) quarter production report, which prompted some minor profit downgrades by analysts. Profit expectations range from $US12.5 billion ($A16.4 billion) to $US14.8 billion.

The reporter owns BHP shares.