Piece Points Weekly E-letter which can be found via the following link:-
www.piercepoints.com
have kindly given me permission to Post the following from their Article 'Vanishing $3 Trillion' which was published by them on may 26th 2009.
The Quote from www.piercepoints.com ---/'What Shell Can Teach Uranium Producers
I mentioned above that uranium buyers are struggling to find uranium supplies to invest in today. There just aren't enough producing companies to go round for would-be buyers in China, Japan and Korea. At least when it comes to conventional production.
As with Shell's oil shale projects, the solution to uranium buyers' problems may be engineering. Rather than paying big dollars to top each other for conventional uranium supplies, buyers could invest their money in unconventional uranium resources.
China seems to have already chosen this strategy. Earlier this month, Australia's foreign affairs minister accidentally leaked details of high-level meetings with the Chinese government. One of the topics of discussion was increasing uranium exports to China from the Olympic Dam mine in South Australia.
Olympic Dam contains the world's largest uranium resource, and is the world's third-largest uranium producer at 7.5 million pounds yearly. But the deposit is different from most other uranium operations. The uranium resource is extremely low-grade, at about 0.05% U3O8. By itself this ore would likely be uneconomic. Fortunately, the uranium occurs with relatively high-grade copper (1.5%). Producing and selling the copper pays for the cost of the mine. Uranium can then be extracted as a by-product, making uranium production economic. In 2008, Olympic Dam had uranium production costs of just over $10/lb after accounting for copper revenues. That's in the upper quartile of uranium mines worldwide.
But producing copper and uranium from the same deposit requires special processing equipment. Like most copper mines, initial processing of copper ore at Olympic Dam produces a copper concentrate. An intermediate form of copper. The next step is to smelt the concentrate in order to create refined copper that can then be used to make wire, pipe and other end-use products. But building and operating a smelter is expensive. Most copper mines simply produce a concentrate at the mine site. They then sell the concentrate to a third-party smelter, who takes on the task (and expense) of turning the concentrate into refined copper.
The problem for Olympic Dam is that most smelters around the world are not equipped to handle copper concentrate containing uranium. The mine would therefore have a hard time selling its concentrate. The solution when the mine was originally built was to foot the expense for a dedicated smelter at the mine site. One that could be designed specifically to handle uranium-bearing concentrates. This was an expensive but necessary step. The Olympic Dam ore could now be turned into refined copper and processed uranium oxide, unlocking the full value of the deposit.
That was back when the mine was originally built. Olympic Dam's owner BHP Billiton is now preparing to expand the mine. Originally, BHP planned to build a new smelter at the site and carry on with operations as usual. But after reviewing the project, BHP decided that a new smelter would cost too much. The company looked around for other options.
That's where China stepped in. According to leaked Australian government information, the Chinese government is planning to import uranium-bearing copper concentrate from Olympic Dam. The Chinese will cover the bill for building a custom smelter facility capable of separating the uranium from the copper. This is a significant engineering cost. But the up-front investment should easily pay for itself, allowing China to become one of the few nations on earth capable of accessing Olympic Dam's huge unconventional reserves. In effect, China is paying to make itself the "buyer of first resort" for the world's largest uranium deposit.
Better yet for China, the expense of building a uranium-capable smelter could have benefits beyond Olympic Dam. Exploration for Olympic Dam-type deposits has ramped up in Australia and around the world over the past decade. New uranium-bearing copper deposits have been discovered in Canada and Brazil (although none yet have the same uranium grade Olympic Dam does). If this increased exploration does lead to new discoveries, China will be uniquely positioned to purchase the ore. Giving the nation a "leg up" in the competition with other uranium buyers./--- End quote
As you will have read Copper Concentrates are highly sought after and it just seems possible that RCP could be keeping some information back from us here.
No responsibility taken for any losses in association with this posting.
All very interesting,
moly
RCP Price at posting:
17.0¢ Sentiment: ST Buy Disclosure: Held
(20min delay)