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Prices for uranium will rise after 2020-go

Prices for uranium will rise after 2020-go
General Director of JSC Atomredmetzoloto Vladimir Verkhovtsev told EastRussia about the difficult everyday life of the Trans-Baikal plant, the unfavorable consequences for the uranium industry from Fukushima, and when the company will start working in the framework of giant projects - the Elkon deposit in the south of Yakutia and Pavlovsky on Novaya Zemlya.  

- Vladimir Nikolaevich, Atomredmetzoloto OJSC is one of the world's leaders in uranium mining. However, the industry was in a very difficult situation: since the accident at the Fukushima-1 nuclear power plant in 2011, world prices for uranium have decreased noticeably, and as of mid-2014, their fall has reached 2,5 times. How are things now?

- The accident at the Japanese "Fukushima" has led to a slowdown in the development of world nuclear energy. In Japan itself, the work of all nuclear power plants was suspended, which immediately affected the supply and demand of uranium in the world. As a result, spot prices for uranium in June-July 2014 fell to the lowest level for 9 years - below 73 US dollars per kilogram! Optimistic forecasts related to the rapid recovery of demand have not come true either, today its decline is estimated at 18-20%. This situation had a negative impact on the development of all uranium mining enterprises in Russia. At the same time, I note that ZAO Dalur and JSC Khiagda extract metal relatively inexpensive geotechnological production method. The situation at these enterprises remains economically stable, moreover, now our efforts are aimed at increasing their production capacities in the very near future. Much more costly is the mining method of uranium mining, which is used at OAO PPGHO, the largest enterprise of the raw materials industry of Rosatom. In the current unfavorable conditions, its competitiveness turned out to be "out of the market".

- How to solve the problem of this asset?

“Given the strategic importance of PIMCS for the industry, its contribution to the development of the Trans-Baikal Territory and social responsibility to thousands of employees, we are not talking about the suspension of the plant. On the contrary, the State Atomic Energy Corporation ROSATOM has determined the task of bringing the flagship of domestic uranium production to a break-even point. The key goal is to reduce the cost of uranium production by 2019. To achieve it, we have worked out in detail a set of measures, including both difficult and painful measures to optimize costs, number, productivity growth, and a program for the development of new mines, technological innovations and a number of non-uranium projects.

The measures taken will allow to bring the plant to the level of profitability, which will create a good foundation for the further development of the enterprise.

- Optimization of production is becoming an important component of the program to break even, especially in a depressed situation on the uranium market. During the period of 2014-2015, OAO PIMCU should reduce costs by 3 billion rubles. How?

- Implementation of the program to bring JSC PIMCU to break-even began in the autumn of last year. In the 2014 year, we plan to reduce the cost of 1,7 billion rubles, and in the 2015 year - by 1,5 billion. The program is based on cost reduction due to the introduction of unique technologies into production. The Central Research and Development Laboratory at PIMCU has developed a project for ore-sorting off-balance dumps. Over 45 years, about 7 million tonnes of ore with an extremely low metal content accumulated on the industrial site. The ore-sorting complex helps to extract commercial ore from this raw material at a very low cost, from which, by heap leaching, we obtain additional finished products. The total economic effect may be 100 million rubles. in year.

A great achievement was the launch of a new technological regime that allows to reduce the consumption of the oxidizer - manganese dioxide - from 6 to 3 kg per ton of ore. In norm 2015 of the year we lay 2,5 kg per ton. Preparations for the introduction of a technological scheme for ore processing using the X-ray radiometric enrichment method have begun. This will also significantly reduce costs.

Innovation ideas are put forth by the specialists of the enterprise who are "sick" for the production and sincerely wish to improve it. For example, the development of the leading power engineer Vitaly Mityashov allowed to reduce the supply of compressed air and electricity consumption in the mines. By the end of the year, this will save more than 20 million rubles.

The work continues on increasing the raw material base of the PIMCU. Within the Kaldera project, exploration and evaluation of new uranium deposits is under way within the Streltsov ore field. The expected result should be a statement on the balance of at least 40 thousand tons of high quality stocks.

The results achieved by the PIMCU team are encouraging: for the first time since its transfer to the holding’s management, the unit cost of uranium mining has decreased by 7% compared to last year.

- Priargun Production Mining and Chemical Association (PIMC) and Chinese Beijing Triumph International Engineering Co., Ltd. (BTIEC) signed an agreement on the development of a feasibility study for the construction of a cement plant. Preparations for the construction of enterprises for the processing of pyritic cinders, the production of diesel fuel based on coal, the release of emulsion explosives are being prepared for implementation. Have you decided to diversify?

- I will share the joyful news. Recently, we signed with the largest Chinese companies, such as Sinopec International Company Rus, a protocol that consolidated the intentions of the parties to build the largest enterprise of the coal chemical industry in the Trans-Baikal Territory. The construction of the plant with the capacity of 500 thousand tons per year is planned according to the Chinese technology CTL, which will allow to produce synthetic fuel of the highest category with minimum costs.

Another joint project with the Chinese side is the construction of a cement plant in Krasnokamensk. Estimated capacity - 326 thousand tons of cement per year. The project will not only completely cover the own need of JSC PIMCU, but also provide cement for the Trans-Baikal Territory and the neighboring regions. At the same time, we will significantly reduce costs, including through logistics. The nearest cement supplier is located at a distance of more than a thousand kilometers. In addition, the creation of new, including high-tech jobs, will have a positive impact on the development of the entire region. Currently, work has been completed on the development of a preliminary feasibility study of the project.

Both projects are planned as part of the creation of the Krasnokamensk industrial park on the basis of the existing infrastructure of PIMCU. Its main advantages are the presence of its own heat and power plant, the ability to connect to water resources, preferential electricity tariffs and close proximity to the source of raw materials.

Within the framework of the diversification program, projects for the processing of pyritic cinders are being prepared for implementation with the acquisition of a wide range of marketable products in the market, the construction of an enterprise for the production of emulsion explosives. By now, coal mining has been increased in the Urtuisky section. In November 2014 the production of crushed stone for own needs of OJSC "PGHKhO" was launched.

I draw your attention to the fact that we are considering new business lines as concomitant with the main uranium production. Their development should ensure the profitability of the holding as a whole and reduce the cost of our final product.

- The focus on the “problem” plant is clear, but a few words about other mining companies.

- As for the enterprises that are mining by the method of underground leaching, I will undoubtedly achieve success. ZAO Dalur tested a new drying technology, which allows to reduce the moisture content of the final product (yellow cake) to 1,5%. The results exceeded expectations: we achieved full compliance with the world quality standards. At JSC "Khiagda" we are planning to put into operation the main production building, construction works in the workshop for the production of sulfuric acid are in full swing. In addition, in ZAO Dalur and JSC Khiagda we are considering new promising areas - the extraction of rare earth metals. In 2013, an experimental installation for the production of scandium at the Dalmatovo deposit of ZAO Dalur was started. Raw materials allow organizing industrial extraction of scandium concentrate in the volume up to 10 tons per year, REM concentrate - up to 450 tons per year. The Khiagdinskoye Khiagda field has the potential for the associated extraction of REM concentrate in an amount up to 340 tons per year. The extraction of REM and scandium will be carried out in passing, on the basis of the industrial infrastructure created for the extraction of uranium.

- OJSC «Atomredmetzoloto managed to negotiate with the Ministry of Defense about the extraction of metals on Novaya Zemlya, in the neighborhood of the test site. Tell us about this project?

- The Pavlovsk deposit on the Novaya Zemlya archipelago is one of the largest lead-zinc deposits in the world. The license for exploration and production is owned by CJSC “First Mining Company”, a subsidiary of ARMZ Uranium Holding. The advantages of the deposit include a shallow occurrence of ore bodies, a relatively simple geological structure, a career method of mining, and good ore dressing. However, the development of the Pavlovsky field is an extremely difficult task, given its remoteness and extremely harsh climatic conditions. This year, our service company JSC RUSBURMASH completed the second field season in geological exploration at the Pavlovskoye field. Drilled 20000 meters. Currently, equipment and personnel have been evacuated to the mainland, and the extracted samples have been sent to the laboratory for further study. Next year we must develop a feasibility study, on the basis of which the northernmost mining enterprise in Russia with a design capacity of 2,5 million tons of ore per year will be designed and built. Industrial development is planned with 2019.

- What are your plans for the Elkon uranium project in Yakutia, one of the largest in the world?

- The reserves of the Elkon group of deposits are more than 50% of the mineral resource base of the holding. They are of strategic importance for the domestic nuclear industry and, undoubtedly, will be in demand in the future. At the same time, the implementation of the Elkon project is expedient only after the restoration of the demand for uranium on the world market.

Currently, the design work is underway, the end of which is scheduled for 2019 year. The launch of production is planned closer to 2030 year. I emphasize that we are already working on breakthrough solutions that will improve the efficiency of the project.

- In recent months, world uranium prices have been growing. Will it continue - for example, against the background of events in Japan, where the issue of restarting the first of the stopped nuclear power plants was recently resolved? What is your forecast?

- At present, there is no need to talk about improving the situation. Prices are still low - the average value since early December - 98,5 US dollars per kg. The November surge to 106 dollars per kilogram, alas, was a short-term phenomenon and does not entail major changes in the market.

Recently, the delegation of Atomredmetzoloto OJSC took part in the annual symposium of the World Nuclear Association in London, where a thorough discussion of the problems of the uranium industry took place. Faced with unfavorable conditions, producers reduce uranium mining and transfer the terms of implementation of promising projects. We can already say that, according to the results of 2014, the world production of uranium will decrease - for the first time in recent years. At the same time, during the discussion it was stressed that in the coming years the supply surplus will be at least 5 thousand tons of uranium per year. Of course, the restart of the nuclear power plant in Japan will have a positive effect, but in conditions of oversaturation of the world market, it is not necessary to count on a steady rise in prices.

Do any forecasts for the near future is difficult. We expect a significant increase in uranium prices not earlier than 2020-2022. It will be conditioned by the growing demand related to the construction of new nuclear power plants in China, India, South Korea, the Middle East countries - the UAE, Turkey, Iran and other countries.

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