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Rio Tinto’s chief executive is big on trading uranium with India. But with his company’s uranium mining facing decreased production, is there room for juniors to jump in?
As Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) gears up to start trading uranium with India, what does the future hold for junior uranium companies operating in the country?
Sam Walsh, Rio Tinto’s chief executive, told the Sydney Morning Herald that the company is interested in selling uranium from Australia to India.
“Once all those steps are in place, clearly there is an opportunity for us and Australia here,” he told the news outlet.
But with Rio’s uranium production in the country dwindling, a hole in the market could exist. The company’s Australian uranium mining has been fading as the Ranger site — operated by its subsidiary Energy Resources of Australia (ASX:ERA) — has seen diminishing uranium production. According to the company, the project had 1.27 million tons of product milled last year and roughly 2.57 million pounds of uranium. That’s 45 and 61 percent lower than in 2013, respectively.
That leaves BHP Billiton’s (NYSE:BHP,ASX:BHP,LSE:BLT) Olympic Dam in South Australia, and the Beverley project as two of the largest uranium mining projects operating in the country. However, while they’re significant producers — Olympic Dam put out 3.98 million tons in 2013 to 2014 — it’s possible demand from India could partially be filled by junior uranium miners stepping up to the plate.
Such companies include Toro Energy (ASX:TOE), which operates the Wiluna uranium project. It’s the first uranium project in Western Australia, and contains a regional resource of 76.5 million pounds of U3O8 with a mine life of 25 years. The company recently secured mining approval, paving the way for work to start on the project.
Vanessa Guthrie, the company’s managing director, was appointed to the Australia-India CEO Forum not long ago. It was started by Australian Premier Tony Abbott and Indian Prime Minister Shri Narenda Modi in an attempt to foster trade talks between the two countries since they signed a deal regarding uranium in the fall.
“It is one of the fastest growing global economies and as Prime Minister Modi’s highly successful visit to Australia late last year has demonstrated, India offers a very significant opportunity for sales of Australian uranium,” said Guthrie.
At the time of the deal, Abbott told reporters that it was largely based on trust due to India not being a signatory to the nuclear non-proliferation treaty.
Laramide Resources (TSX:LAM,ASX:LAM) also operates several uranium projects throughout the Northern Territory. The company’s flagship Westmoreland project has 51.9 million pounds of U3O8 with 36 million pounds U3O8 indicated contained in 18.7 million tonnes at an average grade of 0.089 percent U3O8.
The company also operates the Murphy tenement farm in, a joint venture with Rio Tinto.
Securities Disclosure: I, Nick Wells, hold no direct investment in any of the companies mentioned in this article.