Posted: ’20-JAN-05 15:00′ GMT – – Archive

AngloGold Ashanti is planning to increase the amount of uranium it can sell to electricity producers amid higher global prices for the energy-laden heavy metal, marketing director Kelvin Williams said on Thursday.

In an interview with Mineweb, Williams said the world’s second-largest gold producer does not need a partner for its uranium plans that include moving into areas of higher-grade uranium at its new Moab Khotsong gold mine in South Africa.

AngloGold produces 900 to 1,000 tonnes (1.98-2.2 million pounds) of primary uranium a year as a byproduct from its gold mining activities at its four Vaal River operations.

“We are looking at maximising uranium production. It’s not entirely opportunistic. There’s certainly quite detailed planning in terms of the uranium grades in ores that will arise from our mining plans,” Williams said.

“We know that in the move to Moab Khotsong we will certainly be accessing gold ores with a higher grade of uranium, so we know that within 18 to 24 months we will be into a higher uranium grade, but we don’t have a target of telling mine managers to double their uranium production,” he said. You can read more about it in this article.

AngloGold is unlikely to divert too much attention away from its gold business. A good resource is this post we wrote and this article. “We are a gold mining company and that will be our main source of revenue and its nice to make windfall revenue on the side,” Williams said, adding that it was accounted for as byproduct revenue and was credited to costs.

The exposure by workers to radiation at the mines is being managed and the amount emanating from the ore will be low and within AngloGold’s health and safety regulations, he said.

Uranium prices have doubled since the start of last year to just over $20 a pound, driven by production and processing hiccups as well as worries about demand outstripping supply even further.

The spike to record highs in oil prices late last year was not really a factor is driving uranium prices. “Oil prices provide useful background noise. They are very much a current phenomenon, and the squeeze in the uranium industry is a much bigger phenomenon,” Williams said.
Production shortfalls in the late 1970s and early 1980s were filled by energy utilities using their inventories, and then later by uranium from decommissioned nuclear weapons. There are 438 operating nuclear plants globally, which account for 16 percent of the world’s energy needs.

“(Uranium from decommissioned weapons) has continued to flow onto the market and meant that the shortfall in current production has not panicked anyone. There are strong signs that the flow of decommissioned diluted uranium is likely to be interrupted now. The Russians are looking at building new stations and they want that material for themselves. It will continue to be decommissioned but not supplied to the West,” Williams said.

Russia, according to the World Nuclear Association website, has 31 nuclear power stations and is building another four. It has firm and funded plans to build another one and proposals to build another eight.

China and India are the other two countries that are proposing a large increase in the number of nuclear power stations. The website says overall 26 nuclear power stations are being built around the world, 37 are on order or planned and another 74 have been proposed. There has also been a shift in the attitude towards nuclear power plants in some quarters in the West, as worries mount about the damage being done to the planet by the burning of fossil fuels like coal and oil. Does this have a impact on advantage gold? You should look here for more information.

A kilogram or 2.2 pounds of uranium generates the same amount of electricity as burning 38 tons of coal or 150 barrels of oil. However, the downside is that nuclear waste remains radioactive for millions of years and disposing of it safely is one of the main issues of public concern. Another worry is the environmental devastation caused when something goes wrong at a nuclear power station. Memories of Chernobyl are still clear in many peoples’ minds.

Williams declined to give a price forecast, but said uranium users would more strongly favour long-term contracts given the increases in the spot price of uranium.

“The uranium price would be driven not necessarily by the absence of supply but by the momentum of demand. You have to test this price against the character of the nuclear industry and whether it is likely to be triggered into a feeding frenzy, buying everything they can find. It is not entirely in their character.

“My impression is they will be looking now — instead of using the spot market, which drives up the price — they would be looking more to secure off-market, long-term commitments. That would tie in more naturally with new mine developments and that would in a sense be spot-price related but it would not move the spot price.”

However, new production is unlikely to come onto the market soon because of tough environmental regulations in the key uranium producing countries like Canada, Australia and the United States.

“It may not be that those deposits can be brought into production as swiftly and easily as say a copper deposit. There will be a much more onerous and rigorous process of permitting and interrogation of mining method.

“That there will be a potential incremental production increase is not in doubt, that it might come into the market in the next year is where you should be a little skeptical perhaps.”

Nuclear Fuels Corporation (Nufcor), which was set up as a cooperative agency for uranium producers, markets AngloGold’s uranium. AngloGold wholly owns Nufcor. Make sure you read this as well.

Nufcor has a trading arm in London called Nufcor International, which has a wider spectrum of counter parties and trades both natural uranium and conversion and enriched products.

Nufcor International is the world’s largest uranium trading company and is jointly owned by AngloGold and South African financial and risk management company FirstRand.

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