Kazakhstan Set for Top Uranium Spot with 275% Increase to 15,000 tons by 2010 - NEI Provides Supporting Nuclear Power Scenario

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Written by Richard Finlayson, International Correspondent for Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas) The world's miners will be lacing on their working boots and putting on their hard-hats, ready for a period of high activity in the uranium prospecting and mining sector, when they see a statement made by Kazakhstan's national nuclear energy company in the third week of May.

KazAtomProm (KAP) (Kazakhstan) reported that the country's mines produced 3,719 metric tons of uranium in 2004, which was a 10% increase over 2003 production. Another increase of over 8% is planned for 2005, with a production target of over 4,000 metric. But the news to galvanize the mining world is that it from 2006 through 2010, it plans to boost production by up to 275%, to as much as 15,000 tons per annum. KAP said that this would make the country the world's largest uranium producer. Kazakhstan has reserves of about 1.5 million tons.

The Central Asian country has about 30% of the world's proven uranium reserves and currently is the world's third-largest producer of uranium, with 9.4% of the global total, following Canada, with 29.9%, and Australia, with 22.6%. Its main product output is in the form of low-enriched uranium tablets for nuclear power plants. In addition to producing uranium concentrates, KAP has full cycle plants producing beryllium and alloys and tantalum to produce high quality products, including capacitor powders.

In mid-2004 Mukhtar Dzhakishev, KAP's president, said that $420 million was to be invested in the groundwork for seven new mines in Kazakhstan to support the 15,000 ton target, which, at the time, was scheduled for 2015. He also said that the target production would increase export revenues to $850 million per annum, from the 2004 figure of $100 million. At the same time, he announced plans for a strategic partnership with China in the uranium industry, to run through 2020.

KAP will use its own financing for one or more of the new mines, and the rest will be financed by partners from China, Russia, South Korea, U.S., and European companies. Dzhakishev said KAP was not limited in financial resources, but had decided to pace development with the availability of human resources, materials supply, and infrastructure capacities

With new plans and initiatives now on the move for an era of new nuclear power plant building and major capacity expansions for existing plants worldwide, the 'gap' in uranium supplies has been thrown into sharp focus. According to an MIT report, commercial stockpiles of uranium dropped by 50% between 1985 and 2003. Within the last twelve months, definite plans to build a total of 83 new nuclear power plants by 2020 have been announced in India, China, and Russia, with further new nuclear plant plans being announced elsewhere on an almost weekly basis. For related item see- May 17, 2005 - Nuclear Power Looks Ahead to Global Base Load Needs with Greener, Safer Technologies

Paralleling the KAP plans, Rio Tinto (NYSE:RTP) (London, U.K.), the world's third-largest uranium miner, has announced plans to expand its uranium mine at Rossing, in Namibia, through 2016 (it was previously due to close in 2007), and its interest was perked by BHP Billiton's well advanced bid for WMC Resources in Australia. Rio Tinto controls the world's third-largest uranium mining company, Energy Sources of Australia, and if -- a big if -- its interest in the WMC deal should bear fruit, it would give Rio Tinto a virtual monopoly over Australia uranium mining production. The BHP bid will be finalized in the first week of June. Canadian and other international mining companies are active in Central Asia and Mongolia, looking for new mine prospects and new reserves.

In a keynote presentation to the World Nuclear Association Annual Symposium 2004, Dzhakishev presented a 'world demand and supply' table that showed a total supply shortage of 4,822 tons in 2007 and 5,732 tons in 2010. The massive increase in the production plans of KAP would meet the shortage, he said.

Now, in May 2005, by compressing the time frame and increasing tonnage output from the 2004 targets of 8,300 tons by 2010 and 9300 tons by 2015, Kazakhstan plans to produce 15,000 tons by 2010. This exponential increase in output means that for the next five years, starting now, executives connected with uranium mining and the whole nuclear power sector will be watching and will be making a continuous review of market statistics relative to real demand growth for nuclear fuel being pushed by the fast-rising profile of nuclear energy plans. Current estimates are just that.

As if to confirm Dzhakishev's newly announced 2010 target, the Nuclear Energy Assembly of the U.S. Nuclear Energy Institute (NEI), also in the third week of May, claimed that "a convergence of events unparalleled in a generation sets a challenge to the nuclear industry to build nuclear plants that will strengthen U.S. energy security through the 21st century".

The NEI's vice chairman, Robert McGehee, said that momentum had been built in the industry by enlightened regulatory changes and superb plant performance. Skip Bowman, NEI's president and Chief Executive Officer, said that the nuclear power industry must balance short-term priorities with longer-term objectives. Having reviewed prevailing market conditions, he saw the need to develop new and efficient baseload capacity, of which coal and nuclear would provide 70%. This was in view of a 50% rise in demand for electricity by 2025, unsustainable demands on imported natural gas, and the overall aging of America's generating capacity.

Bowman encouraged energy conservation and the development of all renewable energy sources, but commented, "It's going to take an investment in new nuclear sources to meet these demands while protecting our environment." Results from a Bisconti Research/NOP World survey quoted by Bowman showed that 70% of Americans favor the use of nuclear energy as an electricity provider, 69% accepted the addition of new nuclear plants next to already operating sites, and 77% agreed that electric utilities should prepare now, so that new nuclear plants could be built, if needed, in the next decade. (Survey margin error 3%)

The people have spoken, and it seems that from Kazakhstan to the U.S., the nuclear fuel and power industry is radiant with the prospect of new projects and opportunities.

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