With 38% of the world's known economic uranium resources, WMC Resources Ltd is uniquely placed among global uranium producers to benefit from forecast increases in uranium demand and prices.
WMC's Olympic Dam mine in South Australia is not only the world's largest uranium mineral resource, but also the world's lowest-cost producer, WMC CEO Andrew Michelmore told a Citigroup Global Markets conference in Sydney today. 'Olympic Dam is the only uranium producer to meet all four requirements that buyers want - diversification, reliability, political stability and long life.'
Current global uranium production meets only 58 per cent of demand, with the shortfall made up largely from rapidly shrinking stockpiles. The shortfall is expected to run at 51 million pounds a year on average from next year to 2020. Uranium prices have doubled in the last year to over US$20/lb and are forecast to settle at US$25-30/lb in real terms in the longer term.
'A uranium supply squeeze is looming and the market is set to remain tight as nuclear power programs expand,' Mr Michelmore said. 'Japan is planning 16 new plants, with India and China building another seventeen. This will come on top of the global supply shortfall facing the current 438 reactors.'
WMC is currently spending $50 million studying expansion plans for Olympic Dam's output to up to 15,000 tonnes of uranium oxide and 500,000 tonnes of copper annually. This could make the mine the world's largest producing and lowest cost uranium mine by 2010. As a by-product of copper production, WMC's marginal cost of producing uranium at Olympic Dam is less than $US3/lb.
'Increased production, plus higher prices will ensure that uranium becomes a much more important part of WMC and Olympic Dam's future value.' Mr Michelmore said. 'The contribution of uranium and gold underpin the viability of the planned expansion at Olympic Dam.'
WMC expects to produce 4,300 tonnes of uranium oxide for export from Olympic Dam in 2004. WMC's uranium is exported to electricity generators in Asia, Europe and North America under bilateral agreements between Australian and host governments.
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