Australia's Uranium: Risk Factors

Australia – the world's second largest uranium producer has the world's largest known recoverable uranium reserves.

Australian uranium mining is a bit of a curiosity. There country has a "Three Mines" policy, limiting the number of producing uranium mines. Yet at various times, Australia has had more. Another curiosity: Olympic Dam is the world's largest uranium resource, yet is classified as a copper mine. While the uranium mined at Olympic Dam is in far greater quantity than was produced from Kazakhstan (world's 3rd largest producer), the uranium is classified as a by-product of the underground copper mine.

The Ranger uranium mine is winding down. Olympic Dam is expanding capacity and production. The Beverly ISL operation produces about 2 million pounds per year, and should continue through the middle of the next decade. While there are more than 100 Australian uranium juniors, and some Canadian companies joint-venturing with those, Australia's uranium mining program is hampered by the country's anachronistic "Three Mines" policy. If this changes after the Labor Party's next national conference, which is being held in January 2007, then those who have locked up land, before then, will be celebrating. This is a political risk, which we can not evaluate.

The Honeymoon uranium project is now proceeding to obtain final environmental approval to start mining. Mining actually began in 1981, but was stopped by the South Australia government. We anticipate it will resume and benefit its mine owners and their shareholders. The Ranger mine may or may not expand beyond its first two orebodies into Jabiluka. Of immediate concern is that the Ranger mine is part of a national park system, which is also a major tourist attraction and a UNESCO World Heritage site. The Kakadu National Park is owned by the Mirarr aborigines. The Mirarr won the right to limit future uranium mining development in early 2005.

We find Australian uranium mining very speculative until the Labor Party officially ends its mining policy. The country's future may be dominated by uranium production at Olympic Dam, which some believe may annually produce more than 30 million pounds. There may be insufficient room in this space for the smaller miners. We quote Julian Steyn, in the book he co-authored with U.S. Senator Pete Domenici and Blythe J. Lyons, A Brighter Tomorrow (Rowman & Littlefield: 2004), "If the past is any guide to the future, Australian supply potential must be tempered with the reality that the official party platform of the Australian Labor Party opposes nuclear power development. While current opposition could change as the environmental benefit of nuclear power is more widely accepted, this remains to be seen."