an overview of australia’s uranium sector and the … us, russia and germany all rely on nuclear...

Good afternoon and thank you for the opportunity to present today.

I want to use this opportunity to update you on developments in the uranium and nuclear sector in

Australia; and particularly here in South Australia which has emerged as a key jurisdiction for

discussion and debate about opportunities in these industries.

A quick overview of what I will cover includes:

• An overview of Australia’s uranium sector and the changing global nuclear power sector

• The domestic debate about the nuclear fuel cycle and the South Australian Royal

Commission, and

• The reform needed for Australia and the industry to capture the Untapped Potential

Nuclear is one of the world’s youngest energy sources.

We have been using coal for heating for 1000s of years and in industrial use for 300 years.

Marco Polo reported seeing oil collected from seeps near Baku for use in lighting and for medicinal

purposes.

Petroleum was used to light street lamps in Poland in the 1500s.

Natural gas provided lighting in Stockton, California as early as 1854.

Wind energy has been around for a millennium.

A solar PV device was first observed in 1839, and the first solar PV device was developed by Bell

Labs in 1954.

In that year, the world’s 1st nuclear submarine was commissioned.

And the world’s 1st nuclear plant did not open for business until 1956, at Calder Hall in the UK.

Today there are over 400 reactors operating in over 30 countries providing ~20 per cent of the power

generated in the OECD, and ~11 per cent of global electricity.

56 countries operate over 200 research reactors and a further 180 nuclear reactors power some 140

ships and submarines.

Today, nuclear energy remains the only readily deployable base load power source with zero carbon

emissions.

In Australia, the mining of uranium began in the 1930s as a by-product of radium mining at Radium

Hill in South Australia.

And as you can see, it can be found in most Australian states.

A number of states (Queensland, Victoria and New South Wales) still prohibit uranium mining (and

transport).

Today there are 3 uranium operations – BHP Billiton’s Olympic Dam and Heathgate’s operations in

South Australia, and Ranger in the Northern Territory.

There are 2 further projects that have completed all approvals processes – Toro Energy’s Stage 1

operation at Wiluna in Western Australia and Cameco’s Kintyre Project, also in WA.

There are 3 further uranium projects that are currently undergoing approvals processes.

These include Toro Energy Stage II project, Cameco’s Yeelirrie project and Vimy Resources Mulga

Rocks project. All of these are in Western Australia.

And there are several others developments positioning to follow.

Here in South Australia, Boss Resources has recently acquired the Honeymoon project on care and

maintenance with strong intentions to bring expanded production to market.

It is a fact that we have not maximised our potential as a uranium producer.

Australia has a significant share of global uranium reserves - more than 30 per cent.

We are one of just five nations that account for two-thirds of the world’s uranium reserves along with

Kazakhstan, Russia, Canada and Niger.

However, despite holding nearly a third of uranium reserves, Australia accounts for less than 10 per

cent of the global trade in uranium.

Kazakhstan has managed to gain market share rapidly over the last decade, at the expense of most

other major producers.

By 2014 Kazakhstan was producing around 40 per cent of the world’s uranium.

Meanwhile, the annual value of Australian uranium exports peaked at just over $1 billion in 2008-9.

This has fallen to around $600 million last year due to both lower volumes and lower prices.

Australian uranium is only exported to countries with whom we have a bilateral agreement that

specifies its use exclusively for peaceful applications such as electricity and nuclear medicine

production. Australia has 24 Nuclear Cooperation Agreements allowing export of uranium to over 40

countries in what is a very global market.

This month, the government added Ukraine to the list of countries having a Nuclear Cooperation

Agreement with us.

France is the most nuclear power dependent country with 58 reactors producing around three-

quarters of its power needs, followed by South Korea at just above 30 per cent.

The US, Russia and Germany all rely on nuclear energy for up to fifth of their electricity requirements.

Of course the US is still the largest nuclear power generating country with around 100 reactors.

The earthquake and tsunami in Japan in March 2011 clearly had a substantial impact on the

Japanese industry.

Japan shut down its 54 reactors but has begun to restart its program.

Currently 42 reactors are operable and potentially able to restart, and 24 of these are in the process

of restart approvals.

The first two restarted in August and October 2015. Several more are expected to restart this year.

The outlook for nuclear energy is very strong.

Under the International Energy Agency’s New Policies scenario, nuclear generation will increase by

86 per cent between 2013 and 2040, accounting for around 12 per cent of global electricity

generation. The outlook under the so-called ‘450’ scenario is more bullish – a 152 per cent increase,

with nuclear accounting for about 18 per cent of global electricity generation.

This chart from the US Energy Information Administration shows that projected growth is focused in

China, India and the rest of the world outside the OECD.

Accordingly the outlook for nuclear energy growth in our region in particular is very promising.

China and India in particular are accelerating their programs at a rapid rate.

As at the beginning of March this year-

Operating Under construction Planned or Proposed

China 30 24 178

India 21 6 60

The IEA sees nuclear share in China rising from current 2 per cent to 10 per cent by 2040 in its base

case. It projects 20 per cent share in its 450 scenario.

India similarly will see nuclear share rise from 3 per cent to 7 per cent in the IEA base case, and to 10

per cent in the 450 scenario.

The bottom line is that all this bodes well for the medium to long-term outlook for uranium.

Consistent with this view, the Office of the Chief Economist within the Dept of Industry, Innovation and

Science projects a recovery in uranium prices and exports over the next five years to push export

earnings back over $1 billion.

The Chief Economist’s latest Quarterly summary says:

“The development of new nuclear capacity in China, India and Russia is expected to support a 45 per

cent increase in Australia’s uranium exports to reach 9,450 tonnes U3O8 in 2020–21.

The increase in demand is also expected to underpin an increase in uranium spot prices towards the

end of the outlook period“

I turn now to the Tentative Findings of the South Australian Royal Commission into the Nuclear Fuel

Cycle.

The decision to initiate the inquiry was far-sighted by South Australian Premier Jay Weatherill.

Over the last three or four decades the politics of uranium and nuclear fuel cycle have proven too

difficult for many on both sides of politics.

As I mentioned there are still some State Govts that prohibit the exploration for uranium.

Others allow exploration but not mining – this is unlikely to encourage much investment.

The ‘Tentative Findings of the Royal Commission can be summarised as follows:

- Expansion of uranium mining is economically beneficial but “not the most significant opportunity.”

We however believe the Commission’s modelling hasn’t captured the full potential here

- The Processing and enrichment global mkt is oversupplied for the foreseeable future so the Royal

Commission sees “no opportunity for market development” in next decade. Uranium ‘leasing’ is

however a further potential value add

- Nuclear energy appears to be “Not commercially viable” for South Australia in the foreseeable

future, but given long-term emissions targets, it would be “wise to plan now” for nuclear energy.

The Commission was more positive about the potential for Small Modular Reactors (SMRs)

- Used Fuel storage would meet a global need, deliver substantial economic gains, and could be

operational by late 2020s.

Much of the focus, understandably, has centred on the high level fuel storage proposal.

The Commission found that for high-level waste, South Australia has ‘unique’ attributes which offer a

safe, long-term capability for a HLW disposal industry.

The Commission concluded that the storage and disposal of HLW is likely to be technically feasible. It

said that the timetable would be lengthy, but authorities could draw on the experience of Finland and

Sweden.

The South Australia Royal Commission has identified opportunities It also identified some of the

regulatory obstacles such as (1) PBC Act duplication in the case of uranium projects approvals, and

(2) Federal legislative prohibitions on nuclear fuel cycle industries.

It is important to maintain the momentum which led to the establishment of the South Australian Royal

Commission, and continue the uranium and nuclear industry reform agenda.

I say continue because while the Royal Commission was somewhat of a surprise, it was not against

the tide. The last decade has seen great reform progress in the sector - the federal government, with

bipartisan support, opened up new markets in UAE, China, and India. We saw the WA government

reverse the ban on uranium mining and the NSW government overturn the ban on exploration. And

the Royal Commission here was another progressive step to look at what more is possible in this

sector.

And so the trend on the normalisation of this industry is clearly set.

So, with the goal of looking to continue the positive momentum, the Minerals Council this week has

launched a range of material that demonstrates the potential benefits of further developing Australia’s

uranium industry. ‘Uranium: Untapped Potential’ includes infographics, a series of videos featuring

industry experts and voices, and social media material highlighting the untapped potential further

growth of the uranium industry offers Australia.

We think it’s important to not only have the facts out there, but to also present them in a form and

through media which people can access. We are highlighting Australia’s rich endowment.

The economic opportunity – jobs and revenue – and how a comparable country like Canada, with well

developed nuclear fuel cycle industries, has built a $5 billion industry employing 60,000 people.

We highlight the global energy picture –

- that demand is rising,

- that there are still 1.2 billion people in the world without access to electricity,

- that nuclear energy is a proven technology and the backbone of France’s electricity system,

- and that nuclear growth is focused in our region.

And its not just about energy. Nuclear technology is pervasive in our hospitals and industries such as

agriculture.

Much of this in Australia coming from our world’s best research reactor at Lucas Heights, and the

product of fissioning low enriched uranium.

We highlight nuclear energy’s low emissions profile and its importance in meeting the global climate

change challenge.

And of course uranium’s ‘off the charts’ energy density – releasing extraordinary amounts of reliable

energy with very little uranium fuel and consequently, a small environmental and waste footprint.

And finally, we inform on Australia’s good records of safe production and safe radiation management

in uranium mining, and safe transportation of product to our customers.

In summary…..

There is strong growth in nuclear energy projected as China, India and others expand their nuclear

fleets given the imperative to produce increasing amounts of reliable, affordable electricity while

reducing CO2 emissions.

There is scope for Australia’s uranium sector to benefit – with a third of reserves but just a tenth of

global trade – we can sustainably grow our share of global production in the decades ahead as the

market expands.

The South Australian Royal Commission has made a positive contribution to the domestic debate

about Australian potential in the nuclear fuel cycle. This debate will continue as Australia explores

economic opportunities in high tech, high paying sectors in which we can develop a competitive

advantage.

And it is important to continue the positive momentum of the last decade in reform and building

community confidence in what our industry contributes today and what it can do in the future.

Thank you