Uranium One reported that the recent Kazakh sulphuric acid crisis has abated without impact on the company's uranium operations and start-up projects in the country. The recent start-up of a new acid plant and plans for another have helped.
At the end of June, a new Canadian-built acid plant started up at the Kazakhmys copper smelter in Balkhash, Kazakhstan, using sulphur dioxide (SO2) from there. The acid plant is expected to ramp up to full capacity of 1.2 million tonnes of sulphuric acid per annum by the fourth quarter of 2008.
The new acid plant is financed by a European Bank for Reconstruction and Development (EBRD) loan to abate sulphur dioxide emissions from copper smelting. Kazakhmys said at the end of July that during one month of operations at the acid plant emissions of sulphur dioxide at the smelter were reduced by 30%.
Uranium One said that the increase in operating expenses per pound of uranium sold from $12 in the first quarter of 2008 to $14 in the second was mainly due to a significant increase in the cost of sulphuric acid. Since the commencement of operations at the new Kazakhmys Balkhash sulphuric acid plant in June, Uranium One said the cost of sulphuric acid has decreased significantly and the company does not expect the cost per pound of U3O8 sold to increase further in the second half of the year.
Uranium One itself is taking action to cover future supply problems by participating in a joint venture with Kazatomprom and others to build a new 500,000 tonne per year sulphuric acid plant in the actual uranium province. This will be at Zhanakorgan, close to the Kharasan mines - in which Uranium One holds a 30% stake - in the Western (#6) mining group region, to serve those mines from 2011. It will about 200 km from Uranium One's main ISL mines at Akdala and South Inkai (Uranium One 70%).
The new plant - located on the main railway line in western Kazakhstan - will burn 170,000 tonnes of solid sulphur annually derived from oil and gas production by Tengizhevroil in western Kazakhstan. It is expected to cost $200 million, largely debt-financed, and Uranium One expects to have a 19% interest.
Most of Kazakhstan's uranium mining uses in-situ leaching (ISL), and requires large amounts of sulphuric acid to counter the neutralising effect of the high carbonate content of Kazakh orebodies. Supply has been tight since the Kazakh government introduced rationing in late 2007 following a fire at a sulphuric acid plant. Uranium producers were forced to look elsewhere to secure supplies of the important reagent.
In October 2007, Uranium One said that it had adjusted production targets at its South Inkai uranium processing plant is Kazakhstan due to the temporary shortage of sulphuric acid. At the time, Uranium One said that it expected this shortage to only impact on production ramp-up of both the South Inkai and Kharasan uranium mines.