Between them, BHP’s Olympic Dam in Australia and Rio Tinto’s Rossing Mine in Namibia account for 8% of world uranium production and both recently suffered serious disruptions.
At Olympic, a major electrical fault has damaged the largest of its three mills and BHP expects the mill to be out of action for six months. Potential production impact? As much as 30% down, which is approximately 2.6M lbs. U3O8 out of an anticipated 8.7M lbs. As noted in a recent Cantor Fitzgerald analyst report, the uranium produced here is generally sold in the thin spot market.
Issues at Rossing
At Rossing, there was a fire, as yet unexplained, late last week in the final product recovery plant (“FPR”). While production itself will not be impacted, it’s uncertain when shipments will resume.
We’ve talked a lot here on the Fission CEO Corner about supply side vulnerabilities. Typically the focus has been on the fact that a very large percentage of world supply – both primary and secondary – comes from areas of the world that are prone to political instability, such as Russia, Kazakhstan and Uzbekistan. However, these latest supply issues show that even stable jurisdictions, such as Australia, are far from insulated against disruption.
Lessons learned
This may seem an odd comment to make but uranium is not optional for nuclear power stations. It’s a small cost for the utilities that own these power stations but it’s also one that is utterly necessary. In other words, they cannot run out of it at any time and that’s why they typically have a two to three year stockpile. Yet, knowing how critical uranium fuel is to these hundreds of power stations world-wide, you would be surprised at just how reliant they are upon so small a number of uranium mines. If there is a lesson from these occurrences at Olympic Dam and Rossing, it’s how fast world supply can be impacted and with that lesson will, in time, come more pressure for new mines.
Dev Randhawa
Dev Randhawa is the founding Chairman and CEO of Fission Uranium. He has won numerous awards for his work in the industry, including Northern Miner Magazine ‘Mining Person of the Year 2013’ and as part of the Fission team, Mining Journal Excellence Award 2015 for Exploration.
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