India's growing appetite for uranium
With India's nuclear market pegged to grow to $40 billion by 2020, the country's annual uranium requirement is expected to jump by 1,500-2,000 tonnes.
Posted: Tuesday , 13 Jul 2010
India is keen to shore up its uranium stockpile. Even as several state-owned firms identify mineral assets and are in the midst of floating separate ventures in foreign countries to buy out uranium reserves to feed the country's voracious appetite for power and to maintain energy security, the Asian major's civil nuclear plants are set to benefit from imports from friendly countries.
Russia, which holds about a tenth of the world's uranium reserves, is aiming to be a major supplier to the Indian nuclear power industry. The two countries have decided to work on the creation of a joint venture for geological exploration and production of uranium.
Currently, India produces only about 450 metric tonnes of uranium. Given the recent announcements of construction of new nuclear power plants, which is second only to China, India is keen to source regular supplies at low prices. The country's annual uranium requirement is expected to jump by an additional 1,500-2,000 tonnes. Analysts havesaid that India's nuclear market is set to grow to around $40 billion by 2020. But firm prices could play spoil the party.
A newswire agency report had indicated that worldwide demand for uranium was eroding stockpiles and would result in prices rising to $55 a pound next year. Adam Schatzker, a metals analyst at RBC in Toronto, and Max Layton, at Macquarie Bank Ltd in London, had also forecast that uranium prices were set to climb to $56.25 next year, and $60 in five years.
Though nowhere close to the record $136 a pound registered in July 2007, India is keen to ensure that it has assured supplies of uranium to provide fuel for nuclear reactors, that will generate energy to drive its ensuing economic boom.
The country has 14 nuclear power plants that are used for peaceful purposes. But these contribute only 4% a year to the country's electricity needs. Plans are afoot for a massive increase in atomic power generation aimed at reducing the country's reliance on polluting fossil fuels.
Seeking to buy uranium, government officials in India recently had several meetings with their business counterparts in Canada and Australia. The previous Liberal government in Australia had received international standard safeguard agreements from India and thus had cleared the way for uranium sales. However, this year, major uranium exporter Australia, has refused to sell uranium to India unless it signs the Nuclear Non-Proliferation Treaty. Despite the setback, several other countries are eager to breast the tape.
In September 2008, a three-decade ban on nuclear supplies to India was lifted, following which the government signed civil nuclear agreements with several countries. In Africa, Gabon has said that it was not averse to supplying uranium to India and was willing to enter into a commercial transaction. The Indian government is said to be studying the possibility of reciprocating by enhancing its civil and military cooperation with Gabon. India has already signed agreements with USA, France, Russia and Kazakhstan to supply uranium. Of these, France has already completed its supply, whereas part supplies have been received from Russia, a top government official said. Now, the country is evaluating picking up stake in one of the world's largest uranium fields in Russia.
Russia's state-owned mining firm, ARMZ Uranium Holding Company, has the licence to the Elkon field. A stake was offered to India in the course of bilateral negotiations during the Russian Prime Minister Vladimir Putin's visit to India earlier this year. The possibility of a minority equity stake in the Elkon field in Russia's Yakutia province, which is estimated to hold 344,000 tonnes of uranium or about 5.3% of the world's recoverable reserves, is being seen by analysts as a step by India towards securing long-term supplies.
Confirming the trend, an official in India's foreign ministry said: ``India plans to grow its stockpiles of uranium in anticipation of a nuclear plant building boom. This is set to have a direct implication on uranium price targets and supply-demand fundamentals.''
Not so long ago, Russia had entered into an agreement to supply 2,000 tonnes of nuclear fuel to India. The Russian state-owned firm TVEL Corporation was deputed to supply about 210 tonnes of uranium during 2010-11. Sources indicated that during the last fiscal, about 120 tonnes of natural uranium and 58 tonnes of enriched uranium were received from Russia.
Last month, India also signed a civil nuclear pact with Canada, which would enable the South Asian nation to secure uranium at a set price. Cameco, one of the world's largest uranium miners, has said that Canada could soon be exporting 2,000 tonnes of uranium to India annually.
``India does not have a domestic uranium supply that is capable of supporting its expansion plans. Our agreement will give us the opportunity to serve this market,'' Cameco director Lyle Krahn has been quoted as saying. Cameco, which is based in Saskatoon, is also setting up an office in Hyderabad.
Not that the country is only interested in imports. India is also looking at buying out uranium reserves. State-owned aluminium major, Nalco, has identified mineral assets in Chile, Namibia and Indonesia. ``We have zeroed in on three mining reserves and are considering floating special purpose vehicles in the countries concerned for the acquisition,'' Nalco director, B L Bagra, told reporters recently.
In a bid to secure raw material to run its diversified portfolio, the aluminium producer has been scouting for uranuim, bauxite, coal and copper reserves outside India. Nalco has identified a bauxite mine in Chile, a copper mine in Namibia and a coal block in Indonesia. For uranium assets overseas, the company is to team up with the Nuclear Power Corporation of India, with whom it already has a joint venture to set up nuclear power plants.
India is also expected to produce indigenous uranium to feed its existing and upcoming reactors in the near future. Earlier, an Indian firm had discovered high grade uranium 600 km from Bangalore, at Gogi village in Gulbarga district. It was touted as the highest value uranium deposit found outside Canada and Australia. Relentless exploration for 12-years by the Hyderabad-based Atomic Minerals Directorate for Exploration and Research found large traces of the rare mineral.
Several Indian firms too have invested in uranium fields. Back in 2008, Jindal Steel & Power (Mauritius) Ltd, bought the entire stake in a uranium asset in Mongolia, which was jointly owned by Canadian firms Bluerock Resources and Uranerz Energy Corp, for $2.6 million. Mongolia has about 2% of the world's uranium reserves.
Another small Mumbai-based firm, Taurian Resources, bagged exclusive rights for the exploration and mining of uranium in the Arlit region of Niger, which is the fifth largest supplier of uranium globally. The initial foray into Niger's uranium mining industry has had other Indian firms lining up.
India expects to have 12 new reactors running by 2020, consuming an extra 1,500 tonnes of uranium per year. With India reportedly leading the biggest atomic expansion since the decade after the 1970's oil crisis, the country's high-powered efforts could well pay off, ensuring guaranteed uranium supply.