Japan Joins the Race for Uranium

Energy-hungry Japan is revving up its drive to secure uranium abroad as global demand for nuclear power rises amid stubbornly high oil and gas prices and growing environmental concerns. Major Japanese trading and energy firms are looking at multibillion yen investments in uranium mine projects, with electronics conglomerate Toshiba in February purchasing Westinghouse, the US power plant arm of British Nuclear Fuels, for about US$5.4 billion. Meanwhile, the government, which attaches great importance to nuclear power as a key to ensuring national energy security, is also considering assistance to help domestic firms in the intensifying global competition for fuel at nuclear power plants.
Among those measures are financial aid and more investment-insurance coverage by government-affiliated organizations. Japan is already the world’s third-largest nuclear power nation in terms of the number of civilian nuclear plants in operation. Uranium prices are climbing as energy-hungry China and India are stepping up construction of nuclear power plants to fuel their high-flying economies, while some industrialized countries, including the US and Britain, are moving to build new nuclear power plants after many years of suspension following nuclear accidents at Three Mile Island in the US in 1979 and Chernobyl in Ukraine in 1986. Nuclear power generation has begun to come under the spotlight again due to growing environmental concerns as well as the high prices for oil and gas. Nuclear power plants generate much less carbon dioxide, the primary greenhouse gas widely blamed for global warming, than coal-fired facilities. Renewable energy sources such as wind and solar power generation are not available in sufficient amounts – and at affordable prices.

Private investment in foreign uranium mines has been sluggish since the 1990s, largely reflecting slumping prices for the fuel. Currently, only two overseas uranium mines in which Japanese firms have invested are on stream. One is the Akouta mine in Niger – in which Overseas Uranium Resource Development (OURD) has a 25% stake – the other McClean Lake mine in Canada, in which OURD has a 7.5% interest. Japan-Australia Uranium Resources Development had a 10.64% interest in the Ranger mine in Australia until it sold off the stake in December. However, Japanese firms have begun to refocus on uranium. Itochu, a major Japanese trading firm, announced this month that it and Dallas-based Uranium Resources will conduct a joint assessment of production potential at the Churchrock, New Mexico uranium mine. Itochu will spend as much as 4 billion yen ($34 million) for a 50% stake in the project being developed by Uranium Resources. The mine may produce 400 tons a year, or 4% of Japan’s uranium demand, from as early as 2009. It may operate for 10 years and supply reactors in the US and Japan. Itochu currently sells 4,000 tons of uranium produced in Australia, Canada and Kazakhstan to Japanese customers annually. Last year, Itochu concluded a long-term uranium concentrate purchase deal with Kazakhstan’s state-run nuclear power company, Kazatomprom, under which the Japanese firm will buy 3,000 tons over 10 years.

Japan Focus