BHP Billiton Eyes Russian Uranium MarketPublished by MAC on 2006-06-15
BHP Billiton Eyes Russian Uranium Market
15th June 2006
ST PETERSBURG - BHP Billiton Plc/Ltd, the world's largest miner, aims to become a supplier of uranium to Russia in the next few years, the company's chief executive said. Chip Goodyear said Rosatom, Russia's atomic energy agency, would be a potential customer after BHP Billiton increased mining at its Olympic Dam project in Australia, which he said held 34 percent of the world's known uranium resources.
"What Gazprom is to natural gas, we are to uranium," Goodyear told Reuters late on Tuesday after meeting with Russian President Vladimir Putin and international business leaders.Russia's state-controlled gas monopoly, Gazprom, is the world's largest gas producer.
Canada's Cameco Corp is currently the world's biggest producer of uranium, prices of which have quadrupled since late 2003 as high oil prices and attempts to reduce greenhouse gas emissions revitalise the nuclear fuel industry.
"As Russia's uranium and nuclear business and capacity continues to grow in the years ahead, they are going to need ... uranium supply," Goodyear said.
"We are about to go through a big expansion at Olympic Dam and make a decision to triple uranium production, so we need to find markets," he said. "Rosatom is a potential customer." Goodyear said Olympic Dam, a South Australian mine that BHP Billiton acquired through its takeover of WMC Resources Ltd., was 10 times larger than the next-biggest known uranium discovery.
Production costs were low, he said, as the uranium was mined as a byproduct of copper and gold production at Olympic Dam.
Goodyear said nuclear energy would account for a significant part of the growth in world energy consumption, particularly as countries try to reduce greenhouse gas emissions.
The spot price for a pound of uranium oxide, or yellowcake, has risen nearly 20 percent since the start of 2006 to $43 on June 1, data from Ux Consulting Co., a leading publisher of uranium orices and forecasts, showed.
"I can't predict the price, but I can say the demand side looks good and the supply side is also constrained," Goodyear said.
"When you have a resource like we have, it is just a question of developing it and finding the customers."
Goodyear said he also expected strong long-term demand for industrial metals as developing economies became more urbanised.
"You are going to get dips and bumps along the way but that is part of what the commodity business is all about," he said.
"Your consumers continue to need you to convert the product into a metal that goes into a product that goes into the television sets and the air conditioners, because that fundamental demand is there."
He added: "The supply side is delayed in its response".
BHP Billiton announced on Tuesday it was teaming up with Norilsk Nickel, the world's largest nickel and palladium miner, to explore for minerals in northwestern Russia and western Siberia.
Story by By Guy Faulconbridge