Monday, 12 February, 2007

by Nigel Wilson
The Australian

An expert has challenged some of the popular views about the future of the industry

GREG Hall makes no bones about it: there is too much hype in the Australian uranium sector and it is leading to artificially high expectations.
The managing director of Toro Energy should know.

He's a former manager of mine operations and marketing manager for Rio Tinto's ERA operations and a former mine manager for Olympic Dam when it was owned by WMC.

Toro Energy is a South Australian uranium explorer that was formed through the amalgamation of the uranium interests of Oxiana and Minotaur Exploration and listed last year after raising $18 million through an IPO.

"I believe there is an imbalance between the information the public is hearing from the anti-uranium lobby, and the industry knowledge base," Hall said this week.

"The industry needs to be willing to be more outspoken."

The current uranium boom is very much stock exchange-driven because, despite the recent lift in uranium prices to a reported $US75 a pound, the fundamentals of the supply side of the industry have not changed much for most of the past decade.

While Hall is not a supporter of the claim in the Switkowski report on Australia's nuclear options that there is insufficient nuclear expertise in Australia - he cites more than 30 years' nuclear regulatory experience in South Australia and the Northern Territory and a similar timescale in Western Australia through the ban on thorium extraction - he says it is unrealistic to expect an immediate surge in new uranium mines.

Considering that most uranium exploration is following the time-honoured exploration practice of drilling as close as possible to known resources, Hall says it is fairly easy to predict what will happen.

"It will take from five to seven years for companies exploring now to bring a new mine into operation."

Even so, he doesn't see the potential production overhang of the major current producers - ERA at Kakadu and BHP Billiton at Olympic Dam - dampening the Australian market, arguing that demand from China and India will add to the surge in interest from traditional buyers in Europe.

Nuclear power now accounts for about 17 per cent of global electricity production, but Hall says it is unlikely it would ever exceed 20 per cent, with the emergence of more efficient power stations, renewables and clean coal technology.

He also poured cold water on the argument that was put to the Prosser Federal Parliamentary committee inquiry into impediments to uranium mining and endorsed by the West Australian Government - namely, that Australia will be accountable for any nuclear waste generated from Australian uranium exports.

"The country that takes the uranium has accountability for the spent fuel - that is the policy around the world. "It (uranium) is a business that is very well understood but can be made to look frightening."

He supports the view that Labor will throw out the three mines policy at its national conference in April, opening the way for a new wave of uranium development.

Ultimately, he says, the change in the political cycle will result in states such as Western Australia - with its current hardline Labor opposition to uranium mining - coming around to support new mines.

"There is likely to be a change in Labor policy, but who knows what it is going to be. We'll see mine start-ups in the next five years ... and within 10 years we'll see more small to medium operations starting-up," he said.