Russia’s uranium company Atomredmetzoloto anticipates that the decline in prices for uranium will stop in the near future. On the sidelines of the World Nuclear Association symposium in the British capital, Atomredmetzoloto director Vadim Zhivov stated that he was confident the trend will change in a positive direction soon. He also said that Atomredmetzoloto plans to call a tender to select a general contractor for the Elkon project in the Sakha republic later this year. The company also intends to finalize its discussion with Mongolian partners, with which it will work jointly on ventures in that country. Atomredmetzoloto is in talks with Ukraine on possible joint projects. The company is also pursuing plans to develop uranium mines and processing facilities in Africa. This project will be done in conjunction with the French company Areva.
Prices
The decrease in the prices on uranium spot purchases will be gradually reversed over the next few years, according to Atomredmetzoloto director Vadim Zhivov. The Russian executive noted that the prices on uranium will ultimately rebound, even though the downward trend is likely to continue for several more months.
Deficiencies in the pricing system are in part to blame for the instability of the spot market. The latest decline in uranium prices was prompted by Nukem’s offloading of uranium from Uzbekistan. The principal concern of industry professionals is that such cost schemes do not yield market prices. Atomredmetzoloto took out a loan in the amount of RUR 3 billion from Sberbank. Some of the funds would be directed to buying uranium from Atomredmetzoloto’s own subsidiaries at fair market value in an effort to create an industry-wide cost basis for the nuclear material.
Elkon
Atomredmetzoloto also intends to open tender bidding for purposes of selecting a contractor to develop the Elkon project in the Sakha republic. Even though Atomredmetzoloto recently prepared a reassessment of its investment programs, further opportunities for cost reduction and optimization remain open. The company intends to implement the project with its own forces at the outset and seek assistance from partners in other countries at a later stage. The company is not prepared to give up a large percentage of ownership in exchange for initial investment in the enterprise. Current market conditions and the low price offered for uranium do not allow for Atomredmetzoloto to receive adequate consideration for sharing the project. Moreover, the estimate of the amount of uranium and gold that would be mined at Elkon is very likely to increase in the future. The optimization of uranium mining technology will likewise bolster the attractiveness of the project for future partners.
The company’s executives believe that handling the project with Atomredmetzoloto’s own resources throughout the next year would be more advantageous than joining forces with other entities at this early stage.
Confirmed uranium deposits in the Sakha republic are estimated at 319 000 tons. This number constitutes close to 6 percent of uranium reserves in the world.
As of the start of 2009, the volume of investment needed to materialize the project was RUR 90.5 billion. The target annual mining capacity was set at 5 thousand tons of uranium. Experts predict that the capacity goals can be reached by 2024. Private investors in Russia and abroad have expressed interest to participate in the project.
Atomredmetzoloto has recently decided to start collaborating with the Industrial Technologies Institute. Atomredmetzoloto is making plans to create a center for engineering.
The company is also carrying on with its partnership project for exploration in northwestern Russia. This project is being done in association with Cameco. Atomredmetzoloto’s joint venture with the Canadian company Karakhu is also scheduled to be launched at the start of 2010. The company has already obtained all the necessary permits.
Mongolia
The talks Atomredmetzoloto conducts with its chief partner in Mongolia are also nearing completion. That company, which is owned by a Chinese national, carries on mining operations at the Dornod uranium field. The Central Asian Uranium Company, of which Atomredmetzoloto is a 21-percent owner, along with Khan Resources of Canada also work at that location. The issue at the present time is that the licenses of these enterprises have been temporarily revoked, as Mongolian officials are performing inspections of the companies. Atomredmetzoloto is holding talks with Chinese officials at the same time. The Russian company would like to form a fifty-fifty partnership with the Mongolian entity. Registration papers are currently being prepared. The precise model of operations will be ready within the next year, no later than the summer of 2010.
Atomredmetzoloto’s project in Ukraine is also still on the table. Company managers have their eyes set on the uranium field at Novo-Konstantinovskoye. The progress of this project is slow, however.
Africa
Apart from its other projects in Europe and in Asia, Atomredmetzoloto is making efforts to broaden its operations on the African continent. The company is poised to enter into cooperation with Areva, headquartered in France. Further talks of partnership took place in October 2009.
The company already devised concrete proposals for working in concert with the French entity. The meeting between the partners took place in Namibia. First and foremost, Africa presents interest to Atomredmetzoloto from the perspective of new valuable acquisitions. In most other places, new assets are generally overpriced. The fact that these prices can sustain themselves at high levels indicates that the industry is starting to emerge from the economic crisis.
According to Mr. Zhivov, any acquisitions Atomredmetzoloto makes will be financed through loans, not immediate cash outlays. Atomredmetzoloto is currently implementing its exploratory project in Namibia, and, as Mr. Zhivov pointed out, that country is second only to Kazakhstan in terms of strategic importance to the company.