South Africa's mining sector is taking a long hard look at uranium as world prices for the mineral are rising and future demand is tipped to double as more countries join the nuclear power club and fossil fuel stocks start to come under pressure.
While industry experts claim that the international market for uranium will remain tight for the next five years or more, with resources being stretched to meet increasing demand, uranium-rich South Africa may see the mining sub-sector return to its glory days of some two and a half decades ago.
South African uranium production is presently well down from the peak it achieved in 1980, when 6147 tonnes of uranium were processed. Last year, sales totalled just 643 tonnes, all of which were exported, generating $58m in revenue. The 2006 production figure was 15% lower than the previous year's output and just 9% of that in 1980.
However, this decline seems set to change. International prices for uranium have skyrocketed over the past few years, hitting $277 a kilo in late May, compared with $44 a kilo in late 2004.
A further incentive for the industry came on May 30, when Steve Kidd, the director of strategy and research at the World Nuclear Association, said that demand for uranium will more than double in the next 23 years.
"Demand will climb to 160,000 tonnes by 2030, from 65,000 tonnes this year," Kidd told a mining conference in London.
Though Anglogold Ashanti is the only company currently mining and producing uranium in South Africa, this is set to change. Canada's First Uranium has begun underground development at its Ezulwini mine. It is scheduled to start production in June 2008 and has finalised an evaluation to determine the maximum uranium recovery process for its Buffelsfontein uranium facility.
Harmony Gold, one of the leading gold producers in the world, with uranium assets, is also said to be considering active production in South Africa. Meanwhile, new producer Uramin has 12 mining licences in the Karoo region, in which it owns a 74% interest, and a further two licenses are under application.
A number of large scale gold mining operations are also looking at reworking their slurry dumps to extract uranium from the accumulated waste, now that the process has been made profitable by the spike in prices.
Isaac Chipswa, the marketing director of the International Quality and Productivity Centre, said that, with care, South Africa could cash in on the uranium boom.
"Southern Africa is rich in uranium resources, so if mines can ensure that their uranium production methods are environmentally friendly as well as satisfying the other requirements needed, they will be able to make use of the threefold price increase of the spot price of uranium," he said in an interview with local press on April 6.
South Africa's uranium producers are also set to get a domestic boost, with state electricity provider Eskom in the process of identifying a short list of five sites as potential locations for the country's second nuclear power station.
On May 30, Eskom announced that Oyster Bay, along with the previously identified sites at Bantamsklip in the Western Cape, Brazil and Schulpfontein in Namaqualand, and Duynefontein next to the existing Koeberg nuclear power station, were all being considered. Construction of the 4000MW plant is expected to start as soon as 2009, meaning it could come on line in 2016.
Alec Erwin, the public enterprises minister announced in February that a second nuclear power station was in the pipelines, to complement the existing 800MW facility at Koeberg. The government has long stated that, given South Africa's abundant reserves of uranium, nuclear energy is a viable option for the country's energy future, with as many as six new facilities proposed by 2025.
Addressing a nuclear energy and uranium conference in Johannesburg in mid-February, Rob Adam, the chief executive officer of National Energy Corporation, said that South Africa could enrich uranium to use as fuel in nuclear reactors at a cost far below the current spot price. This would bring the country substantial profits and help overcome the expected shortfall in enrichment capacity.
However, in order to do so, South Africa would have to rebuild its enrichment facilities, which have been dismantled following the winding up of the country's controversial atomic weaponry research.
Enriched or not, South Africa's uranium reserves are set to bring the country treasures in the coming years, at a time when faith in nuclear energy around the world has also been restored.