The Weekly Review: Uranium ground shifts in Western Australia
Uranium politics took a considerable shift this week in the state of Western Australia. The left-wing Labor party opened the door just a little. Not that it matters all that much because they’re unlikely to win the state election next year, and the pro-uranium Liberal government is well ahead in the polls. But - and no one has yet made this point - Labor has started to water down its anti-uranium mines policy, so that in the event it did sweep back into office next year, there’s precedent for widening the door further as reality bites. Moreover, if it does not win until the 2016 election, then it would be too late: several projects would be on the path to development.
The new Labor leader in Perth, Mark McGowan, announced he would maintain his party’s non-uranium mines policy but he would allow mines to be built if they had already been given state government approval. Now, Uraniumblog.com reported this news but the item from the state-owned Australian Broadcasting Corp. was the usual bland coverage expected. For one thing, it did not point out that if - as seems probable - the conservative Liberals win re-election, then that makes a total four years from now of Liberal rule - and plenty of other projects could/will get state government approval by then (and we’ll list below the most likely ones).
The background: Western Australia has substantial - possibly vast - uranium resources but until two years ago these had not been worth all that much because successive Labor state governments had banned mining. Then the Liberals won office and promptly reversed the policy. However, only one project is likely to get the green light by next year and that is the Wiluna project owned by Toro Energy (ASX:TOE). Its shares kicked up on the McGowan announcement.
But it would be possible for several other projects to get up if the critical deadline is 2016.
The largest is the least likely, though. Yeelirrie contains 52,500 tonnes of uranium and is owned by BHP Billiton (ASX:BHP) - but that company is now planning a huge expansion of its Olympic Dam copper-gold-uranium mine in South Australia so would be unlikely to want to flood the market with extra uranium from both there and Yeelirrie. However, last year the company advised the West Australian government it was reactivating Yeelirrie and would be drilling. BHP clearly wants to have another project that is ready for development when the appropriate time comes.
The next West Australian deposit in size is Kintyre, with 35,000 tonnes, owned by Cameco Corp (TSX:CCO) and Mitsubishi. It was discovered 25 years ago but development was stymied initially by the 1990s collapse in the uranium price and subsequently by the state government ban. Its time must surely come. One news report quoted Cameco saying they would not have approvals by the state election next March - but apparently the reporter didn’t bother to ask whether they would by the 2016 election, a rather more crucial point. As Cameco has approved (last August) its scoping study, has prepared an environmental plan (the most critical element), has continued negotiations with the Martu people (the traditional owners) and indeed hired Martu workers (as well as taking some Martu leaders to look at mines in Saskatchewan), I think we can take that as an indication that Kintyre will be ready to go well before the 2016 election. (Plus: Cameco paid out $US346 million for its 70 per cent stake so you would expect that they would want to get some return for the outlay as well as for the money subsequently spent at the project.)
Energy & Minerals Australia (ASX:EMA) has 24,800 tonnes at its Mulga Rock project, and this is followed in size terms by Toro at Lake Way near Wiluna which contains 11,100 tonnes. The Mulga Rock deposits were discovered by the Japanese Government owned corporation, PNC Exploration Australia Pty, in 1979.
Other than Cameco, the other Canadian player in Western Australia is Mega Uranium (TSX:MGA) with its Lake Maitland project acquired in 2007 when the company took over Australian explorer Redport. It has a resource of 10,800 tonnes, and Mega has brought in as joint venture partners two Japanese entities, the conglomerate Itochu and Japan Australia Uranium Resources Corp, which is in turn owned by Kansai Electric Power, Kyushu Electric Power and Shikoku Electric Power. These three utilities became involved at Lake Maitlan because they operated nuclear power stations. We shall have to wait and see the outcome of the nuclear issue in Japan to figure how that might affect the Lake Maitland project.
