Rust spoils the party at South Africa’s sole uranium plant
http://www.miningweekly.co.za/min/news/thisweek/?show=102002
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Rust is spoiling the party at the only uranium-producing plant that South Africa has.
Despite all the hype around uranium, it is only AngloGold Ashanti that is currently producing any of the dense, grey radioactive metal that is used as fuel in nuclear reactors.
An increased rate of corrosion at the AngloGold Ashanti plant in the North West Province has caused down time, loss of production and a contractual shortfall. But then, the plant is 28 years old and uranium has only recently come back into its own – with a vengeance.
AngloGold Ashanti marketing executive Thero Setiloane tells Mining Weekly that the plant’s rate of corrosion “suddenly shot up”.
“We have a dedicated team working on it,” he says, which includes personnel from the University of Pretoria. But that will just fix things for now and AngloGold Ashanti has prepared a far more exhaustive solution. It is embarking on a R230-million scale-up and refurbishment of the stricken plant to ensure optimum uranium production during the life of its Great Noligwa and Moab Khotsong gold-mining operations.
Operational head Neville Nicolau reports that uranium refined at the Vaal River South uranium plant – “the only uranium-producing plant in South Africa” – is treated as a by- product and used to offset the cash costs at Great Noligwa and Moab Khotsong.
Nicolau says that, after a sustained period of low uranium prices, AngloGold Ashanti, in 2005, initiated a four-year capital project to refurbish the plant in order to ensure maximum uranium production over the planned life of the two gold mines that feed it with uranium ore.
The project includes repairing and relocating the acid-storage tanks, upgrading the existing acid-protection system, refurbishing the general plant and reagent area, and replacing the counter-current ion-exchange (CCIX) section, which consists of five parallel streams, but has no standby capacity.
Although the refurbishment project is well under way, Nicolau says that the uranium plant has experienced significant down time as a consequence of excessive corrosion rates in the CCIX, resulting in a considerable decrease in recovery efficiencies.
He says that the implementation of temporary initiatives will help to stabilise the capacity of the plant until its broader upgrade is complete.
In the short term, the resulting uranium shortfall will contribute to higher cash costs at both Great Noligwa and Moab Khotsong.
The plant produced 1,38-million pounds of uranium in 2006 and is expected to get back to its nameplate production level of 1,5-million pounds, in 2007.
The plant will be scaled up by 30% to 40% in 2008/9, when existing fixed-price contracts with Nufcor will come to an end and the full rocketing spot price will become accessible.
At that point, Setiloane expects the uranium by-product to add meaningful value to every ounce of gold, while its contribution is currently minimal.
Credit Suisse Standard gold analyst David Davis is upbeat about the contribution that uranium can make and believes that shareholders can look forward to uranium production increasing significantly from 2009 and the new prices sweetening revenue considerably.
AngloGold Ashanti is also keen on the investment side of uranium and last year launched an electronically traded fund lookalike for uranium with First Rand International and Nufcor Inter-national, which it has half-owned since 1999.
Nufcor Uranium on the Alternative Investment Market of the London Stock Exchange is giving investors direct exposure to uranium in the form of U3O8. Nufcor International markets and trades nuclear-fuels products in various stages of the nuclear-fuels cycle.
