Uranium Price Rise Makes Mongolia’s Reserves Attractive

The Dornod aimag in the eastern province of Mongolia is also called the cradle of uranium. There, relatively well-studied deposits such as the Dornod, Gurvanbulag, and Mardain uranium deposits can be found. Between the years 1988 and 1992, the Erdes mining of the former Soviet Union excavated 550 tons of uranium from the Dornod uranium deposit, and to processed the mineral at the Krasnokamenskii processing plant.

Although some scientists assert uranium explorations in Mongolia started as early as 1948, official explorations only intensified in the 1970’s. During this period, experts from the former Soviet Union explored more than 70% of the Mongolian territory. They determined the existence of six large uranium deposits, with at least 100 occurances and more than 1,000 radio geochemical anomalies, and conducted many drilling and excavation activities. According to Russian estimates based on industrial grading technique, uranium reserves in Dornod, Маrdai, Gurvanbulag, and Nemer deposits amount to 49 thousand tons - an evaluation which allows Mongolia’s proven uranium reserves to rank 15th in the world. However, the International Atomic Energy Agency has since concluded that Mongolian uranium reserves approximate in fact 62 thousand tons.

Nevertheless, Mongolian deposits are considered to be quite small and some experts warn that the reserves’ life span is only estimated to be 10 to15 years. In other words, if we start to conduct mining operations in the country’s uranium reserves, it will be 20 years at most before they are depleted. In that matter, experts urge to continue uranium prospecting and exploration to increase Mongolia’s amount of proven reserves. Mr P.Оchirbat, Director of the Ecology-Sustainable Development Center of the University of Science and Technology, declared that it was now necessary “to expand uranium prospecting and locate more uranium deposits due to the increase of the demand on the world market.” “Investors will not hesitate to finance such projects,” he continued, adding “We need to conduct uranium mining and processing operations. Governmental policy should focus on attracting technologically advanced nations to cooperate in the field of uranium exploration.”

Uranium price sharply rises due to floods in Australia

During mid-2007, the spot price of uranium-oxide concentrate reached its peak and 1 pound (0.45kg) sold at USD136. However, that price was divided by three within a year. Experts concluded that the uranium price drop - as well as the world financial crisis – had contributed to the “freezing” of many uranium prospecting and exploration projects, which in exchange, resulted in a scarcity of uranium on the world market. 

According to Ux Consulting Company (UxC)’s website, the price for pound of uranium-oxide concentrate sharply increased during the onset of 2011 to reach USD73 in February. For Bloomberg, this is connected with the January announcement made by Rio Tinto Group to shut down operations at the Ranger Uranium Mine in Australia, wich represents 9% of the world’s uranium exploration. The decision was made to shut the mine for a period of three months due to severe floods there.
However, according to the Canadian Scotiabank Group, the increase in the price of uranium reflects its scarcity on the world market. In 2010, uranium demand reached 82.5 thousand tons, whereas production amounted to a mere 63.5 thousand. Specialists caution that uranium is usually sold based on long-term trade agreements - just 10% of the uranium commodity is traded on the world market and UxC and TradeTech publish the prices – and that such a drop in value also affects these long-term agreements.

Experts from the British CRU Group estimate that in five years’ time the price of 1 pound of uranium might well exceed USD100. The World Nuclear Association noted on its website that by 2030, 158 new nuclear reactors will be put into operation worldwide, out of which almost 50% will be built in China. It is likely that our southern neighbor will become a very active player in the field of uranium exploration. The Wall Street Journal informed that in 2010 alone, the People’s Republic of China multiplied its uranium imports by three, importing over 17 thousand tons, mainly from Kazakhstan, Uzbekistan, Namibia, Australia and the Russian Federation. According to the predictions made by UxC, by 2020 China will have increased its uranium consumption by four. 

Australia’s proven uranium reserves rank first in the world, while Kazakhstan ranks first in its production 

The World Nuclear Association highlighted that experts estimate that the world total proven reserves of uranium amount to 5.4 million tons. Australia’s reserves – which rank first in the world – represent 31% of this total, or 1.67 million tons. As for Mongolia, its proven reserves amount to 49 thousand tons and it ranks 15th.

In 2009, uranium explorations reached 50,772 tons worldwide, showing an increase of 15.8% in comparison to the previous year. Experts point out that despite a regular increase in the explorations of uranium resource, production still does not meet the demand.
Currently, more than 60% of the world uranium mining operations are run by Kazakhstan, Canada and Australia alone. Kazakh Kazatomprom Company’s CEO Mr Vladimir Shkolnik announced that the company - which conducted uranium mining operations amounting to 17,803 tons - will increase its capacity by 10 percent this year.

The World Nuclear Association’s official website (http://www.world-nuclear.org) informed that 89% of the total production of uranium is in the hands of only 10 companies. As shown by the graph, in 2009, 17% of the total quantity of uranium mined was constituted by Areva, Cameco and Rio Tinto companies alone, each amounting to 17%.  In addition, 59% of the world uranium supply originates from mining companies such as Canadian McArthur River and Rabbit Lake, Australian Ranger and Olympic Dam, Namibian Rossing, Russian Kraznokamensk, Kazakh Tortkuduk and Budenovskoye and Nigerian Arlit and Akouta. However, experts from the Business Resource Company assert that large mining companies are ‘getting old’ and their production costs are increasing. The numbers of economically sound mining companies - where the cost of 1 pound of uranium production does not exceed USD40 - are decreasing, which in turn tends to increase the price of uranium. 
As a matter of fact, the majority of companies occupying a substantial position in the uranium sector have already set foot in Mongolia. Since 2003, Canadian mining companies - such as Cameco, East Asia Minerals, Khan Resources, Solomon resources limited, Mega uranium and Western Prospector Group - have entered Mongolia’s uranium sector and added to the number of top ranking uranium mining companies such as Areva, BHP Billiton, Rio Tinto and Rоsatom already operating here.

Is there any news on the creation of nuclear power plants in Mongolia?

As it was mentioned earlier, it is planned to be put into operation 158 nuclear reactors by 2030. The World Nuclear Association showed that construction of 62 nuclear power reactors in 2010 alone has been a record since 1992. 
Academician Kh.Namsrai once declared, “Scientists have no doubt that the most appropriate choice of energy supply for Mongolia - which is environmentally friendly, does not pose a threat to humans, and is cost effective -is nuclear energy.” Actually, three years have passed since talks and discussions about nuclear power consumption and nuclear power plants in Mongolia took place. After an official visit to Mongolia in April 2009 by former director of the International Atomic Energy Agency Mr Mohamed ElBaradei, Mr S.Enkhbat, director of the Mongolian Nuclear Energy Agency, gave an interview to Reuters. “We will build a nuclear power plant starting from next year,” he said. However, two years have passed since this interview, and little happened except for the feasibility study on the location of the nuclear power plant.

At the end of last year, the first fieldwork experiment and research forum was organized for the Preliminary Study for the Construction of Nuclear Power Plant in Mongolia Project. Scientists and researchers concluded that a nuclear power plant could be built in the Malkhiin Plain in the Bayanjargal soum (Tuv province). A 100 km square area near the lower Kherlen Bridge is also believed to be a suitable location for building a nuclear reactor. Mr S.Enkhbat declared that “a detailed infrastructural feasibility study to determine the capacity of a power plant suitable for Mongolia, as well as its construction requirements” will be conducted, and that “work is scheduled to be completed in three years’ time.” From this, it can be concluded that Mongolians will not enjoy the benefits of a nuclear power plant in the near future. Specialists remind that the Government urgently needs to resolve the issue of nuclear power reactors at a time when the country’s thermal power plants lay flat. They point out that in terms of security, this work needs to be operationalized extremely carefully. As the proverb goes, “measure seven times, cut once.” But that does not mean it needs to be prolonged for seven years.  

Rosatom Company’s CEO Mr N.N.Spasskii remembered that since the Chernobyl crisis, rigorous safety measures and monitoring have been put in place. “If a nuclear power plant is built in Mongolia, then I can assure you with full responsibility that it will be completely safe,” he said. Is it not about time Mongolia speeds up its use of natural resources and creates alternative sources of “clean energy” in order to walk in line with world development?