Tan Hwee Ann and Angela Macdonald-smith
www.bloomberg.com
BHP Billiton, the world’s biggest mining company, said demand for uranium would grow as many countries have “massive” expansion plans for nuclear power generation.
The company is in negotiations with potential customers for uranium it could sell, dependent on the expansion of the Olympic Dam mine in Australia, BHP said in a presentation on its website. Prices for uranium sold from the potential expansion may be settled at a higher price than BHP’s long-term price assumption, UBS said in a report, citing the company.
BHP’s Olympic Dam mine in South Australia contains about 34 per cent of the world’s known uranium reserves. The company is carrying out initial feasibility studies into an expansion, which would more than triple production by 2014.
“Demand is poised to grow with many countries embarking on massive nuclear expansion plans,” BHP said in the presentation. “Security of supply concerns have increased contracting activity in (the) spot and long-term market.”
Spot uranium prices, which have more than tripled in the past two years, were at $US65 a pound on December 13, according to Metal Bulletin.
Olympic Dam’s uranium production is currently fully sold forward to 2010 at less than $20 a pound, possibly at about $18 a pound, UBS said.
Uranium demand is forecast to surge by 135 per cent between 2005 and 2030, BHP said, citing forecasts from the World Nuclear Association, with Asian consumption quadrupling.
