Article in The Australian this morning:
Dozensof countries including Britain and France are now turning to Australia to lockin a long-term clean energy source that can help the world dramatically cut itscarbon emissions.
Afternearly a decade in the deep freeze, nuclear power has been getting a fresh lookas a way for the world to rapidly end its dependence on heavily-polluting coaland oil.
Anenergy crisis brought about by Russia’s invasion of Ukraine has turbochargedthis, prompting much of western Europe to look for ways to slash their relianceon Moscow.
Shunnedby politicians here as being too hot to handle, uranium has been a workhorsefor decades, fuelling nuclear reactors in more than 30 countries.
Althoughoff-limits locally, uranium generates baseload electricity essential tounderpin an energy grid but with barely any carbon emissions.
Justthis month British Prime Minister Boris Johnson promised up to eight newnuclear plants within this decade. This followed France’s Emmanuel Macron, whois fighting a presidential election, outlining plans to build as many as 14 newreactors to bolster his country’s energy needs.The control centre training areaat Hinkley Point C Nuclear Power Station, in Bridgewater, England. Picture:Getty Images
Thisuranium renaissance is creating a shift in Australian investment markets, whichsaw one player – mining hopeful Boss Energy – quietly cross the key $1bn markover the past week.
WhileBoss hasn’t yet shipped an ounce of uranium, the valuation makes thePerth-based company hard to ignore.
Productioncould still be 18 months away as it does the numbers on the mothballedHoneymoon mine it is sitting on, 80km northwest of Broken Hill and just insidethe South Australian border.
Butchief executive Duncan Craib is confident that as the world revisits uranium’srole in the energy mix, his mine can become a low-cost, long-term supplier.
Craibsays nuclear energy can “absolutely” play a role, alongside solar, wind andhydro, to deliver clean baseload power in Australia.
“Whenwe talk to politicians on both sides of politics, there’s definitely a growingawareness,” Craib says.
“Fornuclear power in Australia to be considered and for it to be successful, youreally do need bipartisan support from both the major political parties – andwe’re not there yet,” he says.
Craibis very close to bringing Honeymoon back to life. The mine had previously beenowned by a Russian-backed entity Uranium One but closed the operation in 2013amid weak prices.
Bosslater took control and took a fresh look at the economics of the mine. A trialin 2016 used different processes to extract uranium, creating a much betterprospect for a financial return even at the then subdued prices.Honeymoon minesite about 80km northwest of Broken Hill. Picture: Greg Cochrane.
“Ultimately,what we wanted to do was increase the production throughput, so you’reproducing more and lower your costs and get the right tenor of uranium out ofthe ground, which we’ve achieved over years of testing and trialling,” Craibsays. The type of mining proposed – in situ recovery, which involves a form ofleaching rather than digging ore – sharply reduces the energy intensity neededto extract uranium.
Theprice of uranium collapsed after Japan’s Fukushima disaster just over a decadeago, where the nuclear power plant was hit with an earthquake and tsunami, andradiation was released into the atmosphere. Despite the extreme nature of theevent, later investigations concluded that better safety oversight and planningcould have prevented the accident. However, investors turned off uranium,sending it to around $US20 per pound for years.
Boss Energy chief executive Duncan Craib.
Recentunrest in Kazakhstan, which supplies nearly 40 per cent of the world’s uraniummarket, pushed prices above $US42 per pound late last year. Russia’s invasionhas sent uranium to more than $US63 per pound and Craib expects it to movehigher.
“There’sbeen a significant shortfall in supply versus demand. This past year, there’s adeficit of 48 million pounds. With that deficit, fuel buyers have been relyingon their own inventory. But there’s been no question in the industry that newsupplies are needed, the mines need to be built, new resources need to bediscovered.”
Hepoints to the hard realities of the numbers that are underpinning a restart ofHoneymoon.
“Currentlythere’s about 440 reactors operating in 31 countries. You’ve got 56 units underconstruction and 96 are in the planning stage. There’s another 325 proposed andthe leading driver of that really is China,” he says.
‘PolePosition’
Honeymoonalready has mining infrastructure in place, and critically, it has one of foururanium export licences, which can accelerate the ramp-up of the operation.
Otherexisting uranium mines in South Australia include BHP-owned Olympic Dam andFour Mile, which is backed by US-owned Heathgate Resources. Mining at RioTinto’s majority-owned Ranger Mine in the Northern Territory finished earlylast year and the site is in the process of being rehabilitated.
Bosslast month locked away a $125m capital raising to help it progress with a finalinvestment decision over the next month and costs linked with the resumption ofmining. Mining could start between 12 and 18 months after a final investmentdecision.
Anengineering study found the mine had 2.45 million pounds of uranium, whichcould see it through for 11 years. All-in costs are projected at $US25 a poundover the life of the mine.
It’snot just pricing – supply chain shocks in recent years mean that Australia’sreliability is one of Boss’s strengths.
“Australiajust stands in such a good position. We are located in a very uranium-friendlyjurisdiction of South Australia. And Australia really is a very geopoliticallystable country for mining. And then you look at good logistics and supply chaininfrastructure, we can ship directly around the world,” he says.
The Honeymoon mine’s previous owner Uranium Onemothballed the operation in 2013. Picture: Greg Cochran.
Craibsays he found big investors are prepared to take a fresh look and increasinglycomfortable around ESG (environmental, social and governance) issues in uraniummining. The capital raising also saw a number of new fund managers move ontothe share registry, with many supporting the company further after the raising.Shares were sold in the raising last month at $2.15 each. Boss shares closed onFriday at $2.75.
BellPotter analyst Regan Burrows says with a fully permitted project in a top-tiercountry, Boss is in “pole position” to start engaging with power companiesaround the world to secure long term offtake agreements.
Fukushimaprompted the world to revisit and lift safety standards at existing nuclearplants, says Craib. New plants are “very, very safe” and are built with thehighest safety standards possible, he adds.
Packaged barrels of Uranium at BHP Billiton'sOlympic Dam project in South Australia.
InAustralia the politics around nuclear has softened slightly. Most of the debatefor Australia’s nuclear submarine deal under the AUKUS defence agreementcentred on the timing of delivery of the eight subs rather than their energysource. A South Australian royal commission into uranium in 2016 said Australiahad a role to play in the nuclear industry, including waste storage anddisposal. It also said uranium should be considered as a future low-carbonenergy source.
Untila final investment decision is signed off, Craib is in the process of buildingout his company, shifting from being an explorer to being a miner. Thisinvolves building out the management and workforce.
“Therewas a medium to long-term plan to get the mine up and running,” he says.
“And I think we have an attitude in the company to try and always, youknow, be in the best possible position we can for when that window does appear.It has been a bit fortuitous, but we were well prepared.”
(20min delay)