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AngloGold Ashanti, by virtue of its South African operations and wholly owned
subsidiary, Nuclear Fuels Corporation of South Africa (Nufcor), is arguably the
world's longest continuous producer and marketer of uranium. AngloGold Ashanti
produces uranium oxide concentrates (U3O8) in the form of a powder, as a
by-product of its gold mining operations, thus giving Nufcor access to extensive
reserves of uranium. South African production peaked in the early 1980s at 6,500
metric tonnes (t) per annum. Currently, AngloGold Ashanti produces around 800 to
900 t of U3O8 annually, with the potential to increase this by 300 t in the
future, given capex and metallurgical plant constraints.
Uranium makes a small but valuable contribution to AngloGold Ashanti's bottom
line. In 2005, sales of uranium concentrate contributed around 0.5% to the
AngloGold Ashanti group's net profit.
Uranium is produced as a by-product by three of AngloGold Ashanti's mines,
all located in the Vaal River area, namely, the Great Noligwa, Moab Khotsong and
Kopanang mines. It is extracted from gold-bearing ore as a by-product only, and
grades are consequently much lower than those of dedicated uranium mines in
other uranium-producing countries. The average grade globally is around 1.5%,
and the two largest uranium mines in the world have grades of around 25%.
(Uranium grades are a function of geology and mineralisation.) Typically, the
grade of uranium mined in South Africa is 0.05%, that is, 500 g of uranium per
1,000 kg of rock.
Located in Westonaria, near the town of Carletonville in the North West Province of South Africa, uranium
makes a small but valuable contribution to AngloGold Ashanti's bottom line. In 2005, sales of uranium
concentrate contributed around 0.5% to the AngloGold Ashanti group's net profit.
If unprocessed, this uranium is disposed of in the residue of the
gold-bearing ore onto the tailings dams, along with other waste from the mining
and processing operations. Monitoring of tailings for radioactivity is not
necessary as the uranium is in a diluted form, and below environmentally
acceptable levels of radiation.
Mining and processing of uranium is often viewed in a negative light as the
public frequently associates risks with this high-profile product. There are
primarily two risks associated with uranium:
- Toxicity: uranium is a heavy metal and toxic to humans, and
- Radioactivity: at the level of grade in South African mines, the risks are low from a health and safety perspective.
Higher (that is, more concentrated) grades of uranium could be found in
certain areas of mining or processing
operations in South Africa irrespective of whether these operations actually
extract uranium, and these higher
grades increase the risk to employees. To monitor and manage these risks,
AngloGold Ashanti has appointed
Radiation Protection Officers at each of its South African operations whose
function it is to measure levels of radioactivity in all working places at regular intervals, and to monitor
absolute levels of radioactivity in the workplace. In addition, personnel are
monitored individually, on a regular basis, to determine radiation doses
received, as well as annually to monitor overall health. The National Nuclear
Regulator also has open access
to AngloGold Ashanti mining and processing plant operations to conduct audits.
Uranium diuranate (in the form of a slurry) is transported for further
processing in special-purpose road tankers, fitted with tracking devices and
under escort. The drivers have been specially trained on how to manage
unforeseen events, such as accidents or hijackings, and no material has ever
been lost or stolen.
The final product is shipped to Nufcor's major customers, all of whom are
ultimately nuclear electricity generating utilities around the world, including
in the United States, Europe and the Far East, who convert U3O8 to slightly
enriched nuclear fuel products to power the uranium in nuclear fission reactors
that generate heat to drive gas-generator turbines which in turn generate
electricity. Most of Nufcor's nuclear power generator clients are either part or
full parastatals.
AngloGold Ashanti is mindful of its moral obligation to ensure that the
uranium does not fall into the ‘wrong' hands. The company is and always has been
subject to International Atomic Energy Agency (IAEA) Safeguard Compliance in all
sales contracts and in every shipment made of U3O8 . In addition, on 15 July 1991, South Africa became a signatory to the Non-Proliferation Treaty and signed
a ComprehensiveSafeguards Agreement with the IAEA on 16 September 1991.
AngloGold Ashanti, therefore, is bound to the Statute of IAEA and all supply
contracts include South African nuclear safeguard clauses which help promote a
transparent and responsible chain of custody of uranium.
About uranium
Uranium is a naturally occurring radioactive element and is the 48th most
abundant element on earth. It is found in natural rock crystal and is many, many
times more abundant than silver, which can also be found as a by-product of gold
mining.
Uranium has one vital characteristic. This is its ability to split its atoms
through fission into two lighter fragments when bombarded with neutrons, thus
releasing large amounts of energy. This characteristic provides the role of
uranium in the generation of nuclear power.
Of the two different types of uranium isotopes contained in uranium metal,
one, U235, can sustain a chain reaction during the fission process. Given the
huge and growing global demand for energy and the shortage of non-renewable
sources of energy, alternative sources of energy are constantly being sought.
Nuclear power has an important role to play as 1 kg (2.2 lb) of uranium can
generate the same volume of electricity as 38 t of coal or 150 barrels of oil.
Global demand for uranium is estimated at 77,000 t annually and this is
expected to be maintained at these levels for the next 15 years or so. By
contrast, annual production of new-mined uranium amounts to only some 3,000 t
(in 2004), and this very material shortfall in production of uranium is expected
to continue for some time into the future.
The price of uranium has increased sharply in recent months and is currently
around $33/lb. This compares with $7/lb towards the end of 2000.
South African reserves of uranium account for approximately 10% of global
reserves. The largest reserves are to be found in Canada, Australia and the USA,
which together with Kazakhstan also have the best future prospects for uranium
mining.
Nufcor - history and ownership
The Nuclear Fuels Corporation of South Africa (Pty) Limited (Nufcor), was
established in 1967 to process and market uranium concentrate produced by South
African gold mining companies to nuclear power generators around the globe.
Nufcor can trace its origins to 1951 in a company called Calcined Products (Pty)
Limited founded for the express purpose of processing uranium-rich slurries
which are a by-product on South African gold mines. Shareholding in Nufcor over
the years has vested in the mining companies that set up and used the facility,
in relation to their proportional usage from year to year.
In 1998, on the establishment of the then AngloGold Limited, Nufcor became a
fully owned subsidiary, as AngloGold was the last uranium-producing
shareholder still utilising the facilities of Nufcor. A year later, Nufcor
International Limited (NIL) was established in London to undertake trading in
nuclear fuel cycle products and services.
NIL, which is incorporated as a company in the UK, is jointly owned by
AngloGold Ashanti Limited (which contributes its uranium production and market
expertise) and FirstRand Limited (contributing its expertise in banking and
financial services). As a nuclear fuel trading and finance company, NIL markets,
trades, finances and manages the risk related to nuclear fuel and associated
processes. NIL has positioned itself to provide a range of physical and
financial products to both producers and consumers of uranium, and is now the
primary marketing agent for all uranium produced in South Africa, including that
from non-AngloGold Ashanti operations.
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