European approval for Salamanca offtake agreement

21 March 2017

The Euratom Supply Agency, the nuclear watchdog of the European Union, has approved Berkeley Energia's offtake agreement for the sale of the first production from its Salamanca uranium mine under development in Spain. The mine is expected to enter production in late 2018.

While it is normal for vendors to supply a new reactor's first load of fuel as well as some subsequent reloads, rules in the European Union require all power plants to have more than one fuel supplier in the long term. The Euratom Supply Agency ensures this common policy on fuel supply in the nuclear sector, overseen by the European Commission, which must countersign any significant nuclear fuel contract for it to comply with EU law.

Last November, UK-based Berkeley signed a binding off-take agreement with privately-funded commodity trading company Curzon Resources, formerly Interalloys Trading Limited, for the sale of first output from Salamanca. The agreement is for 2 million pounds U3O8 over a five-year period at an average fixed price of $43.78 per pound of contracted and optional volumes. There is potential to increase annual volumes and extend the contract to 3 million pounds.

According to Berkeley, the agreed fixed price "compares favourably to the current spot price of $25 per pound and establishes a strong cash margin above the steady state production costs of around $15 per pound".

The Euratom Supply Agency has now concluded that the offtake agreement is in accordance with Article 52 of the Euratom Treaty and has countersigned the agreement.

Euratom said, "We particularly welcome the emergence and development of a new EU-based uranium mining project and believe that it will contribute to the security of supply of natural uranium for the Community users."

Berkeley managing director Paul Atherley said, "At full production, Salamanca will be Europe's largest uranium producer accounting for 10% of the total requirement and will be important to the EU's security of supply, which currently relies on Russia, Kazakhstan and Niger for almost 60% of its uranium."

Berkeley said it is in discussions with "other potential off-takers in relation to contracts with terms similar to those outlined in the Interalloys agreement with pricing at or around long-term benchmark levels for term contracts."

Construction of the Salamanca mine began earlier this year. Shipments from the mine, which is expected to produce 4.4 million pounds U3O8 (1692 tU) per year, are expected to begin in late 2018. This, Berkeley says, "coincides with a large number of European and US utilities looking to re-contract at the same time as the Chinese new reactor demand comes on line".

Researched and written
by World Nuclear News