A combination of factors has caused The Slug to think about uranium. There’s all the fuss about Iran and its ambitions to become a nuclear power, and there’s the hoo-hah on the stock market where uranium stocks have been bid up to remarkably high price levels.
It’s when you take these two issues, and run them together that you arrive at the central problem. On one hand we have uranium as a global issue. It’s country versus country, future-of-the-world stuff. On the other hand, we have uranium as a fun thing for speculators.
In Australia, so far we only see the fun, profit-making aspect of uranium. We see it simply as another energy source, something that we should mine to sell to China, and elsewhere, so they can generate much-needed, low-polluting electricity.
There is absolutely nothing wrong with this aim – but the question not being addressed by anyone playing games on the stock market is whether uranium is a suitable business for a classic Aussie penny dreadful mineral explorer?
Consider what’s happening. We have uranium and the nuclear fuel cycle as global issues being discussed at the highest level. And we have uranium as an exploration target for chaps with Geiger counters wandering around the outback looking for a fast buck.
Over time, it will dawn on some of the share traders working the penny dreadful end of the market that this is not a sustainable situation.
Put even more simply, The Slug reckons that the politics, safety reporting standards and the security implications of uranium mean that we will never see a small Australian company operating a small uranium mine.
To test this hypothesis ask a simple question: is there such a thing as a small uranium mine?
‘Not really’ is the correct answer because uranium is requires special handling, high security levels, high safety standards and high environmental standards. In a way, it’s like diamond mining on steroids with the safety and security aspects overriding everything else.
Put another way, it is impossible to imagine Australia with a series of small uranium mines dotted across the outback with staff from the Office of the Chief Scientist rushing around making sure that everyone is complying with government standards regarding processing and emission levels.
The production of uranium, as opposed to exploration for uranium, is a job for big companies – and that is something that government is highly likely to demand simply because it would be impossible to police a string of small operators.
And who might those future uranium miners be? Well, the answer is fairly obvious, isn’t it? They’ll be the usual suspects, BHP Billiton, Rio Tinto and perhaps a handful of others.
The miners will be the companies able to jump through government hoops when it comes to meeting the costs of compliance and satisfying the stringent standards of the Chief Scientist, and the environmental lobby which already breathes down his neck.
What does this say about the great uranium hunt underway in Australia today? Quite a bit, actually. It says enjoy it while it’s hot, trade shares like they’re going out of fashion, but don’t expect any small uranium explorer you see today to ever actually produce a kilo of yellowcake – that part of the process will be put in safer hands whether the company involved likes it, or not.
