Uranium One Celebrates Start Of Pilot Mining In Kazakhstan

Japanese, Canadian and Kazakh officials collected in a remote corner of Kazakhstan in April to mark the beginning of the pilot-mining phase at the Kharasan uranium project.

The uranium mine began pilot production in the fourth quarter of last year but the opening ceremonies were postponed for warmer weather, says Chris Sattler, the senior vice-president of corporate development at Uranium One (UUU-T, SXRZF-O).

Uranium One owns 30% of the Kyzylkum joint venture, which owns and operates the Khrasan project. Its partners are the Kazakh state uranium company, Kazatomprom, and a consortium of Japanese companies, including Toshiba Corp., Marubeni Corp., and Tokyo Electric Power, Japan’s largest utility company.

Kazakhstan requires that all mining projects undergo a pilot production phase to demonstrate that ore can be removed and processed properly before a company can move into commercial or industrial production.

Sattler says he expects the joint venture will receive approval for industrial production in 2010. (One of the company’s other uranium mines in the country was in pilot production from October 2007 until December 2008 before it was given an industrial production licence.)

Kharasan is in southern Kazakhstan, near the border with Kyrgyzstan and about 200 km northwest of the town of Shymkent.

Production is forecast to be in the range of 2,000 tonnes (5.2 million lbs.) of U₃0₈ a year, but Sattler says the resource is “sufficiently large” enough to increase that amount to 3,000 tonnes in the future.

Although Kazatomprom is responsible for working out all marketing and sales agreements, Sattler says he wouldn’t be surprised if the vast majority of the uranium is sold to Japan.

Geologists have known about the Kharasan deposit since 1979. Uranium One acquired its stake in the project after it took over UrAsia Energy, which owned part of the deposit, in 2007. Construction began in 2005.

While some mining companies complain of bad experiences working in the country, Sattler says Uranium One’s experiences have all been positive.

“Kazakhstan has some of the world’s lowest-cost operations, the deposits tend to be massive, and the mining method, which is in situ recovery, we find to be a very efficient way of mining,” he says. “The country and Kazatomprom have been very successful in ramping up production in the industry.”

Sattler adds that Kazakhstan has actually been one of the success stories in the industry.

“Uranium is an extremely strategic resource and Kazakhstan has some of the world’s largest resources,” he says. “And when you’re selling the product to utility companies, (they) like to see slow and steady growth from their suppliers and Kazatomprom has performed well.”

When asked if Uranium One is looking for more uranium assets there he declined to comment, but said the company “is always looking.”

In addition to uranium, Kazakhstan is one of the world’s largest producers of ferrochrome. It also has quite a number of copper and gold mines, is a large zinc producer, and has some of the world’s best oil fields.