AUSTRALIAN uranium production for the next 15 years is already allocated and new mines are needed, a conference was told.
Uranium explorer Toro Energy, which operates in WA and the Northern Territory, said very little of the nation's uranium resources are available to sell into future markets.
Toro's managing director, Greg Hall, today told delegates at the first day in Adelaide of the Paydirt 2010 Australian Uranium Conference that this created a unique opportunity that favoured the development of smaller economic deposits.
There is no doubt long-term uranium demand is there, even with current short term supply and price volatility but demand is double what it used to be five years ago,'' Mr Hall said.
Something like 150 million pounds of uranium is being put into long-term contacts every year and the reality is that a one gigawatt power reactor will come on line every month for about three years from 2014.
This will be a significant time in the global uranium market and Australia has a place to play.
However, most of the Australian production from existing mines or new expansion over the next 10 to 15 years is already allocated with major utilities or customers - and very little domestic uranium can now be termed `unallocated'.
It is an environment that is driving our decision to bring Wiluna into production as soon as possible in the short to medium term as though it is only 700 tonnes a year or so, it is not allocated output and we will protect that position as long as possible against this highly significant global supply opportunity.''
Mr Hall also stated it appeared that recent internal controls in Kazakhastan - which emerged last year as the world's largest uranium supplier - had now swung back to being under Russian influence and away from its western economy leanings of recent times.
This potentially could create a supply scenario for northern hemisphere uranium access similar to what we saw with Russia's control on gas supplies into Europe,'' Mr Hall said.
On long term prices, Mr Hall said their internal market intelligence expected these to swing back towards US75-85 a pound even though there was some persistent softness in the spot market currently.
The Chinese bought about 3700 tonnes of concentrate last year and they bought carefully in the downtime,'' Mr Hall said.
There is a lot of buying going on, however, and this will firm as more reactors come on line and supply is increasingly locked into longer term contracts.''
On Toro's flagship Wiluna uranium project in WA, Mr Hall told the conference that work was well advanced to commence on ground work and mining for a trial resource evaluation pit at the project later this month.
This will actually represent the first uranium bulk sampling mining operation in Western Australia since Rio Tinto undertook similar underground bulk sampling work at Kintyre in 1995,'' Mr Hall said.
As such, that represents a very exciting milestone in the resurgence of uranium exploration and development in Western Australia.''
The pit test work aims to prove up Wiluna's planned mining process, resource parameters and groundwater management controls.
Once in operation, Toro envisages exporting 730 tonnes of uranium oxide per annum from Wiluna through either existing uranium export outlets at Adelaide or Darwin.