Atoms and arguments


GEIGER counters buzzed into action as soon as Federal Opposition Leader Kim Beazley reversed the Labor Party's long-held three uranium mines policy.Uranium stocks enjoyed a brief boost this week but not to the same extent as earlier in the year during speculation Australia would sign a deal to export nuclear fuel to China.
And far from the 1954 frenzy sparked by the discovery of the Skal deposit near Mount Isa by a small syndicate of miners.
The next day, Mount Isa Mines sent every available man and vehicle to peg out adjoining leases.
That same deposit is tipped to be the first cab off the rank if Premier Peter Beattie bows to the federal lead at next April's Labor Party conference.
Perth-based Summit Resources, whose joint venture partner Valhalla is subject to a $167 million scrip bid by Paladin Resources, has been playing the policy waiting game since 1990 when it pegged out leased land 40km from Mount Isa.
So far, it has been able to carry out preliminary investigations as to the size of the deposit and others including the Valhalla deposit, but is waiting for the state government green light to commit more money to carry out a $15 million to $20 million engineering study.
For exploration manager Peter Rolley, it made economic sense to keep plugging away through the no uranium mines policy because "Beattie hasn't always been in power" and Beazley's rethink this week was nothing new to the company.
"Back in May, it was flagged he was investigating the opportunity to change the Labor Party platform," Rolley says.
"There's a groundswell of change and the signs are very encouraging."
And he disagrees with Beattie's claim that uranium mining is a threat to the state's booming coal industry which contributes $1.1 billion in royalties to Government coffers.
"Most coal exported from Queensland is metallurgical coal which is not used for power generation overseas," he says.
Queensland Resources Council chief executive Michael Roche is in favour of a green light for uranium mining and disputes Beattie's coal claims.
"With the International Energy Agency forecasting that global energy demand will grow by more than 50 per cent between 2003 and 2030, there is going to be more than enough scope to sell all our energy commodities," Roche says.
"It would be good news for Queensland in terms of new mines in the northwest of the state, the direct and indirect jobs created and a new source of mineral royalties, adding to the $1.5 billion already being pumped into the state's coffers."
Whether coal or nuclear is a cheaper source of electricity generation depends on who is doing the numbers and brings into the equation a range of variables.
A report commissioned by the Australian Nuclear Science and Technology Organisation (ANSTO) earlier this year presented a number of scenarios on the costs.
It found nuclear power would be competitive with the actual costs of coal and gas generation when taking into account the price of raw materials.
But when considering a variety of factors including safety, carbon credits, greenhouse emissions and government subsidies, nuclear power was on par with coal.
A 2004 report by the Royal Society of Engineers in Britain in 2004 found the cost of nuclear generation was more stable than coal.
It found uranium in nuclear power was about 5 per cent of the total costs of electricity generation, so even if the fickle uranium price doubled, the cost of electricity goes up 1-2 per cent. This compares with coal where the raw material cost is more than 50 per cent.
The contract price for uranium has risen from $US18 per pound to $US21.58 per pound in the December 2005 quarter. Credit Suisse forecast the contract price to continue to climb, reaching $US23.16 per pound in 2010.
Most of the uranium produced in Australia is sold on long-term contracts rather than the spot market, which is hovering around $US45 per pound.
Trying to ascertain the value of the deposits in Queensland is difficult – economists say it is not as easy as multiplying the 45,000 tonnes of known possible reserves with the spot price, which would give it a value of $US4.46 billion ($A5.85 billion).
Queensland has the least amount of uranium of all of the states with known deposits amounting to no more than about 3 per cent of Australia's 1.14 million tonnes.
Geosciences Australia says Australia has about 40 per cent of the world's uranium deposits.
South Australia, which includes the Olympic Dam and Beverley mines has 72 per cent while the Northern Territory, with the Ranger mine and the potential Jabiluka, has 18 per cent. Western Australia has 7 per cent..
But Geosciences Australia's Ian Lambert says Queensland's 45,000 tonnes is a conservative estimate because exploration has been limited.
Two of Queensland's other known deposits are owned by Canadian companies looking for future supply in the same way the Chinese are hunting base metals and coal assets.
Mega Uranium holds the Ben Lomond lease 50km from Townsville which is said to have about 4770 tonnes of uranium oxide as well as the smaller Maureen deposit which has about 3000 tonnes of uranium oxide.
"Overseas predators are taking a five to 10-year view with these companies, betting on a change of heart by governments that will allow uranium mining in the future," Fat Prophets analyst Gavin Wendt says. "Most activity is being generated by Canadian players who are the biggest producers of uranium in the world."
Half a century after the Skal boom, Summit Resources is more confident than ever about being able to mine the Skal and Valhalla deposits.
"The next step is to continue drilling at a low-key level," Peter Rolley says. "If these deposits are given permission to be developed they are world-class uranium deposits."