Uranium output set to double in next five years

Beijing plans to double domestic output of uranium oxide in the next five years to help plug a fast-growing supply gap for the nuclear power plant fuel.

It is estimated the mainland will have to import almost 80 per cent of its uranium fuel needs by 2050, up from 40 per cent in 2015, according to Li Youlian, director of State Geology and Minerals Bureau. It was largely self-sufficient a few years ago.

Beijing also wants domestic nuclear power firms and uranium miners to take advantage of depressed values of uranium assets in the wake of Japan's nuclear power disaster, to invest abroad where there are more low-cost resources.

It is adopting the two-pronged approach to ensure the mainland's nuclear power expansion programme - the world's largest - will be backed by sufficient fuel.

'The target for the five years to 2015 is to add newly proved domestic uranium resources by 100,000 tonnes, and for output to double from the previous five years,' Li told the China Nuclear Power Leadership Summit.

China is the world's 10th-largest uranium oxide producer. Its estimated output last year was 850 tonnes, according to the International Atomic Energy Agency.

It was estimated to have about 170,000 tonnes of proved resources in 2009, or 3 per cent of the world's total. Only material that can be recovered at US$130 or less a kilogram is counted.

Eight nations control 81 per cent of the world's uranium resources and 93 per cent of output.

To manage the risk of potential supply shortages, Beijing last year launched a uranium strategic reserve programme, with a long-term plan to stockpile 100,000 tonnes of the fuel. Li said 5,000 tonnes had already been accumulated in the first half of this year.

Beijing plans to raise nuclear power generation capacity to 40 giga-watt by 2015, up from 11.7 GW now. This would raise annual uranium demand to 7,675 tonnes from 1,975 tonnes.

Li said China had provable uranium resources of more than 2 million tonnes, but exploration remains low and the uranium content is just 0.1 per cent to 0.3 per cent, considered low internationally. Low resource content means high production costs are required to produce the same amount of oxide.

The nation's budget for uranium exploration was only 650 million yuan (HK$686.5 million) for the five years to 2015, just 0.18 per cent of the total exploration spending for all minerals, Li said.

Funding has been a big limiting factor for uranium exploration, which is primarily done by the two state-owned nuclear power projects developers, China National Nuclear Corp and China Guangdong Nuclear Power.

But Li said Beijing had opened up the sector to other companies, particularly nuclear power project developers, as long as they held only minority stakes in projects.

The government also encourages companies to invest in uranium projects abroad, particularly amid depressed market conditions.

'Stock valuation of many listed international uranium miners have fallen 70 to 80 per cent since the earthquake and nuclear disaster in Japan,' Li said. 'The current economic slowdown caused by sovereign debt crises in developed nations has provided a good opportunity for investment.'

The price of uranium oxide has fallen from a high of almost US$70 a pound in February to about US$45.