Dear potential investor,
As you consider the wide range of places to put your hard earned cash as the Australian economy stages its tentative recovery, there are a couple of things to keep in mind about the uranium boom.
Firstly, the boom is real – there are well over a hundred exploration tenements in play just in WA, and a rich choice of targets including a couple of the largest miners in the world, proving up resources from the Bight to the Fitzroy Valley.
Secondly, rumours of the demise of the global nuclear power industry are somewhat exaggerated. Despite flat lining in the 1980s and bankrupting a whole generation of utilities across the western world, the news from China is bullish at the moment and the Australian
Government may be on the edge of approving uranium sales to Russia, sidelining opponents who worry about Russia’s queasy nuclear proliferation record.
That’s about the extent of the good news, unfortunately. If some of the uranium plays look unusually cheap at the moment, there are good reasons for that.
First, unlike the rest of the mining sector, you’ll be mining a carcinogen. Inhaling or ingesting uranium increases your risk of cancer. Same with the dozen or so ‘daughter’ isotopes including radium and radon gas that seep from the waste stream. That creates a formidable headache when trying to work out how to contain millions of tonnes of finely powdered radioactive tailings after the mining is done.
It’s a key reason why you’d be confronting entrenched and determined opposition from local Aboriginal land owners, environmental groups, trade unions, local residents and their lawyers. It’s not really appropriate to leave these carcinogenic by products lying around in the landscape, which is why the Ranger Uranium Mine in Kakadu has a bond condition to isolate the waste for a period of not less than 10,000 years. That’s going to be expensive and probably impossible, but that’s the game you’d be in.
Secondly, rumours of the demise of the global nuclear power industry, while exaggerated, are very interesting indeed. Nuclear fission is the most excruciatingly expensive method of boiling water imaginable, which is why nuclear is being out-competed, everywhere in the world, by low cost and fast moving renewable energy.
In fact, in 2009, for the second year in a row, the US and Europe added more capacity from renewable energy than fossil or nuclear. That investment trend is accelerating as utility-scale baseload solar plants come onto the market in Spain and the United States, driving costs forever downward. There’s no nuclear renaissance anywhere on the horizon.
Thirdly, you’d want to think pretty carefully about buying into a mining outfit that dug up the raw materials for weapons of mass destruction and then sold them to nuclear weapons states.
We have a highly fictionalised safeguards regime designed to prevent Australian uranium from falling into the ‘wrong hands’, but the nuclear Non Proliferation Treaty review conference in New York just renewed the global consensus that there are no ‘right hands’ when it comes to nuclear weapons. The moment has arrived to demobilise and then abolish this Cold War suicide pact.
As this tortuous process runs its course, it is having the ironic consequence of flooding the market with blended down uranium from decommissioned warheads, further depressing the battered world uranium price.
Two of the largest uranium miners in the world got a rude ‘new paradigm’ shock recently when the Commonwealth Government announced it would hand the Koongarra lease back to the Djok landowners in Kakadu, and the NT Government decided that permitting the Angela Pamela uranium mine 20km from Alice Springs wasn’t worth the continued political heat.
The last time the nuclear industry declared a renaissance was afoot, was the late 1990s. A wave of uranium hopefuls across WA were wiped out when it came to nothing.
It is possible that the Barnett Government’s endearing tendencies toward environmental and social illiteracy will see a couple of uranium projects in WA bulldoze over the top of local opposition – we’ll see.
Personally, I wouldn’t wish uranium shares on my worst enemy. Buyer beware.
This article was first published on Wangle – http://www.wangle.com.au/1opinion/an-open-letter-to-uranium-investors