BHP Billiton To Develop Yeelirrie Uranium Mine in Western Australia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Global mining major BHP Billiton Limited (NYSE:BHP) (Melbourne, Australia) plans to develop the Yeelirrie uranium deposits in Western Australia. The company plans to start construction by 2011 and commercial activity by 2014. The mining operations at Yeelirrie, which is considered to be Australia's second largest uranium reserve, will represent the development of the first uranium mine in the country in 20 years. BHP Billiton has submitted documents as part of the Environmental Impact Assessment process to the federal and state departments of environment for necessary approvals.

The Environmental Impact Assessment process and approval, which is the first step in the development of the mine, is very critical to any uranium-mining project in Australia. The process analyzes several aspects of the project, including location and land use, geological impact, climate change, water supply sources, the nature and impact of mining operations, procedures related to treatment of ore, transportation of raw materials, techniques of waste disposal and its bearing on the environment, the consequences of uranium mining and production to human life, animals, flora and fauna, plant construction methodology, work environment safety and health conditions, plant decommissioning procedure, protection against radioactive materials and radiation, rehabilitation, and the impact of mining and drilling operations on the archaeological and cultural sites in the country.

The government of Western Australia has stated that the documents will be scrutinized and that the project will be approved only if it meets all regulatory criteria. BHP Billiton is also conducting a prefeasibility study. The firm had also initiated talks with the Western Australian government to develop a regulatory framework for approval of the project. However, the state government is firm on its stance that it will not allow shipping of processed uranium oxide through its ports. The uranium will have to be transported in trucks to the ports of Darwin and Adelaide, the only ports in the country that have approvals to ship uranium for exports.

The Yeelirrie project is expected to consolidate BHP Billiton's position on the global uranium supplier leader-board. The company is also awaiting approval for its proposed expansion of the Olympic Dam mine in southern Australia.

When fully operational, the Yeelirrie mine is estimated to bring in revenues of about $13 billion over a period of 30 years. The mine is located in Wiluna, about 420 kilometers from Kalgoorlie and has proven uranium reserves of about 52,000 tons. BHP Billiton plans to mine 5,000 tons per year of uranium oxide and 2,000 tons per year of vanadium oxide for a period of 30 years. This is expected to increase Australia's uranium exports by 50%. At its peak, Yeelirrie's production capacity could increase to 8,000 tons per year, which will make it the biggest uranium-mining operation in the country. The mine is 9 kilometers long, 1.5 kilometers wide and less than 5 meters deep, which makes it very conducive to mining and extraction. The project will employ approximately 700 people during the construction phase and 300 personnel during production and operations.

The uranium industry in Australia, which accounts for 36% of the global uranium supply, has been facing challenges because of various political and federal issues regarding uranium mining and nuclear power development. Ahead of the 2009 federal elections, the Labor government allowed the state governments to formulate individual nuclear fuel development policies. While the state of Queensland continues to ban uranium production, the governments of southern Australia, Western Australia and the Northern Territory have lifted bans and are now encouraging uranium mining.

Australia presently has three uranium mines in operation -- Ranger in Northern Territory, and Beverley and Olympic Dam in southern Australia. The Honeymoon mine, also in southern Australia, is expected to start production by 2010. Work on the Kintyre uranium mine, in Western Australia's East Pilbara region, will commence shortly. The 3,600-ton-per-year mine was jointly purchased by Mitsubishi Corporation (TYO:8058) (Tokyo, Japan) and Cameco Corporation (NYSE:CCJ) (Saskatoon, Saskatchewan) from Rio Tinto plc (NYSE:RTP) (London, United Kingdom) in July of last year. The Olympic Dam mine, developed in 1988, was the last uranium mine to be developed in the country. The federal government is also supporting uranium mining in the wake of the present economic crisis in order to increase investment opportunities, export revenues and job opportunities. From 2015, Australia is expected to generate more than $23.55 million annually from uranium export royalties.

Uranium mining is garnering attention globally, as most countries are exploring the possibility of nuclear power as a viable option to fossil fuel. Australia, which has the world's second-largest global uranium reserves after Canada, is set to benefit from this trend. The value of Australia's exports, mainly to countries in Asia and Europe, is set to increase from $900 million in 2008 to more than $1.9 billion by 2014. The price of uranium was at an all-time high of $136 per pound in 2007, before plunging to $40 per pound a few weeks ago. Industry experts indicate that the price, which has now stabilized at about $51 per pound, is expected to increase to approximately $65 per pound in future.

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