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LATIN AMERICA Uranium has taken on a whole new glow in Lula-land


Uranium, and who will mine it, is a hot topic in Brazil. With the fight against carbon emissions gaining strength, Brazil is one of several nations where nuclear energy is emerging as an environmentally acceptable alternative to both coal-based and hydroelectric power stations.

In mid-2007, the Instituto Brasileiro de Mineração (Ibram) presented the Congresso Nacional with a draft law to open up uranium mining, enrichment and sales to the private sector, until now the exclusive domain of the state. The proposal is now being considered by Brazil's legislature, and prospects for its approval look good in view of the need to ensure fuel for Brazil's Angra 1, 2 and 3 nuclear power stations. Angra 2, on hold for a long time, and Angra 3, a new project, both recently gained the go-ahead from President Luis Inacio Lula da Silva, who is anxious to ward off the threat of electricity shortages that are widely feared for 2010-12 if the country's gross domestic product continues to grow at more than 5 percent a year.

Nuclear energy currently accounts for less than 3 percent of Brazilian energy generation but is seen as an answer to an increasingly complex energy equation in Brazil, where opposition from a strengthening local and international environmental lobby is stalling or dramatically slowing the major new hydro-power projects proposed for Amazonia. The opening up of uranium mining would play right into the hands of Brazil's Vale (formerly Cia. Vale do Rio Doce), which is already prospecting for uranium in Australia in a $6.5-million venture and has started exploring for uranium in Canada.

Opening up the Brazilian uranium industry would probably also interest Rio Tinto, which has iron ore and bauxite interests in Brazil and is currently one of the world's three largest uranium producers, with mining interests in Australia. The other two big world uranium producers are Cameco Corp., Saskatoon, Saskatchewan, and Areva SAS, Paris.

Brazil holds the world's sixth-largest uranium reserves, measured at 309,370 tonnes, but exploitable only by state-owned Industrias Nucleares do Brasil (INB). Measured world reserves are put at 4.42 billion tonnes, with Kazakhstan weighing in with the largest reserves at 957,000 tonnes and Australia second at 910,000 tonnes.

Because of its state monopoly on uranium, Brazil is one of the few producers that does not participate in the world market. Its 2006 output of 360 tonnes was therefore relatively low compared with world output of 46,499 tonnes, putting it in 12th place worldwide in terms of actual production.

"One of the reasons that led Ibram to bring uranium to debate is the sharp increase in prices for this mineral. In three years, for instance, uranium prices have risen to $110 per pound from $12," Ibram president Paulo Camillo said. "Brazil's advantage is that as well as having the ore, it also has the technology and facilities for both concentrating and enriching uranium for electrical energy production, although these processes are also today the exclusive domain of the state, according to Brazil's current constitution."

Should the Brazilian uranium market be opened up, Brazil would be able to sell not only the ore itself but enriched ore, a value-added product that would boost export revenue, Camillo said. The Ibram president noted that a more flexible approach to uranium mining has been adopted by Argentina and Uruguay, Brazil's neighbors in the Southern Cone Common Market, also known as Mercosul, "due to the great interest that has arisen in this mineral over the last few years." "Uranium is experiencing an upturn in usage worldwide . . . it's almost a global boom," Nelson Hubner, Brazil's mines and energy minister, said in a recent interview. Part of the boom is doubtless because of the interest the Chinese are now taking in the mineral. The search for uranium mining joint ventures and partners to construct and operate nuclear power stations has become a preoccupation for Chinese companies.

"Uranium also was the star at the PDAC (Prospectors and Developers Association of Canada) in March," Camillo said. That was hardly surprising, given world trends 437 nuclear reactors in operation in the world, 30 under construction, 74 planned and 162 proposed, according to an Ibram study. According to the World Nuclear Association, current world uranium demand of 67,000 tonnes per year should double by 2030.

Confident of the probable privatization of uranium mining in Brazil, which would be fully in line with the country's current business trends, Vale is already in advanced negotiations with INB should the opportunity emerge to launch a joint venture or even a Vale-controlled uranium mining project.

The first new uranium mining project to emerge in Brazil should be INB's Santa Quiteria project in Ceara in the northeast, where production was halted when Angra 3 was put on hold. With the resumption of the Angra 3 project, INB has already put out the word it is seeking a partner to develop Santa Quiteria, the country's largest identified reserve with 142,500 tonnes.

The next largest reserve is in Lagoa Real in Bahia state, where the state government is currently putting various mineral deposits up for privatization. The Caetite deposit, which has estimated reserves of 100,770 tonnes of uranium, is currently INB's only operational uranium mine. Other Brazilian reserves so far untouched are at Pitinga in Amazonas state, near Paranapanema's tin and rare earths mine, and Rio Cristalino in Para state, near a Vale copper deposit.

"The uranium market has shown a lot of demand," Roger Agnelli, Vale president and chief executive officer, said about his company's uranium plans for Australia. "Demand will only grow . . . the world has no alternative, and Vale is very interested." However he would not be drawn on the precise tone of the company's recent contacts with Brazil's INB.

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