Uranium Mining: Stirring up worries
By Charlotte Mathews
This article was originally published in Financial Mail
ANOTHER threat to the vast, stark beauty and environmental health of the dry Karoo is looming. Some believe it may be even more serious in the long term than extraction of shale gas through fracking.
Peninsula Energy, an Australian-listed company, has begun a pre-feasibility study into promising uranium deposits around the Ryst Kuil site near Beaufort West which have been partly explored by previous owners of the mineral rights. If results are positive, it could start producing uranium from a shallow mine by 2019-2020, CEO Gus Simpson says.
Stefan Cramer, a hydrogeologist advising the Southern African Faith Communities’ Environment Institute, says shallow mining of uranium in an area like the Karoo would stir up radioactive dust, which would spread over a large area. Standard methods to suppress the dust, using water sprays, would both draw on scarce water resources and contaminate ground water.
Fracking, too, would affect the Karoo’s water resources.
Cramer says the danger uranium mining poses near Beaufort West is more serious than that of shale gas fracking because, unlike shale gas, it is already known that there is substantial, easily mined uranium in this area.
Uranium spot prices, at around US$35/lb, are well below their mid-2000s levels and Fitch Ratings forecasts they will remain low for some years because of high inventories, supplies from uranium recycling and a slow return to service of Japan’s nuclear power stations. But in a November presentation, Peninsula said $60/lb-$70/lb long term was likely by 2017-2018 as there was insufficient new mine development and secondary supplies were declining. A significant deficit of uranium was likely by about 2020, it said.
Though Cramer agrees the current uranium price does not encourage new mines, he says Peninsula Energy is funded by Pala Investments, owned by Russian oligarch Vladimir Iorich and his son Evgenij. Possession and development of Ryst Kuil has more to do with geopolitics — cornering uranium to keep it from Chinese buyers — than economic reality.
Simpson says Peninsula has a diverse shareholder base, including Pala with 12% but also Resource Capital Fund with 21% and BlackRock funds with 11%. French nuclear company Areva, the previous owner of the Karoo sites that Peninsula is now exploring, holds 3.4%. Areva had other business considerations, which is why it did not move into production but has stayed invested in Peninsula, he says.
Funds like Resource Capital and BlackRock make investment decisions based on sophisticated financial modelling, not political considerations with an uncertain outcome, he says.
Peninsula’s business model is to be a low-cost producer from multiple sources of uranium, initially from its Lance Projects at Wyoming in the US. Though spot prices are low, Peninsula will sell uranium on long-term contracts, which are priced higher. It engages with various potential offtakers and Eskom could be a customer.
Simpson says Peninsula has responded directly to Cramer on the environmental issues he has raised. Groundwater supply and management is part of the mine’s environmental management plan. This will be a zero disposal/release mine, to protect the environment and conserve water.
Cramer says uranium miners in particular need a good track record in mining but unfortunately that is rarely the case. Often they fold, leaving the rehabilitation up to someone else. In a place like the Karoo, uranium mining has too many inherent risks. It changes the landscape and livelihoods of communities, rarely to their benefit.
Simpson says all mining has both positive and negative effects but measures to mitigate the negative effects are well understood and commonly used in SA and globally. As part of Peninsula’s commitments, it has cleaned up areas that were contaminated by previous owners and put control measures in place.
Jonathan Deal, who represents the anti-fracking organisation Treasure the Karoo Action Group (TKAG), says he has been aware of the threat of uranium mining for at least a decade, but addressing the fracking threat became more urgent and TKAG does not have the resources to address both issues simultaneously. In December TKAG and Afriforum launched legal action against government to challenge the fracking regulations.
He says before Peninsula Energy is allowed to start uranium mining, the same detailed strategic environmental assessment into the consequences should be done that is already under way for shale gas.
“We need to look carefully at how badly we need this and what benefits it will bring to the country, as well as the costs in the medium to long term.”