A major source of zero-carbon electricity generation, Europe’s uranium supply is especially important given the increasing tensions between Russia and the West.
The European Union is currently able to supply just 1.5 per cent of the feed needed for its 128 reactors and it relies largely on supply from the Russian sphere of influence. But these reactors provide 27 per cent of the region’s overall
power requirements.
Foratom, the European nuclear trade body, has therefore called for a “substantial” increase in the level of EU funding for future research programmes if the region is to maintain its output of nuclear power.
The discovery of a shallow, high-grade deposit of uranium in Salamanca, Spain is set to have a significant impact on this scenario. Energy company Berkeley Energia has been developing a mine at the site. Having arranged financing last year, the company has begun initial construction and plans to start production late next year.
The mine’s location is just three hours from Madrid, so it will provide an accessible, secure and local supply of uranium to European and global utilities.
The Salamanca mine is set to become one of the top ten uranium mines in the world and a significant long-term global producer. It will be able to supply more than four million pounds in weight of the metal a year, equivalent to 10 per cent of Europe’s total requirement.
Berkeley Energia believes the Salamanca mine will also be opening at an ideal time for investors, as it will help fill a supply deficit that industry experts have called “fundamental” and “unavoidable”.
The price of uranium has been in decline since 2007, due to factors such as the rapid rise of output from Kazakhstan, which is now reversing, the Fukushima earthquake in 2011 and associated decline in demand from Japanese reactors, and Germany’s plan to shut its nuclear programme by 2022. But large supply cuts from uranium providers in Kazakhstan and elsewhere in the world are potentially tipping the market into a long-awaited supply deficit and signaling a turnaround in price.
The Salamanca mine also has some of the lowest operating and capital costs in the world, aided by the project’s proximity to outstanding infrastructure in the region. This has enabled it to proceed with construction even while other mines are ceasing production due to the low uranium price.
Only with the highest quality assets can you consider development of a mine through a decade-long low in the commodity price
As Michael Stoner, mining analyst at Berenberg, says: “Only with the highest quality assets can you consider development of a mine through a decade-long low in the commodity price.”
The Salamanca project also has a robust governance framework and strong support from stakeholders, including local communities. The mine is in the region of Castilla y Leon, which has suffered from some of the highest levels of unemployment in the EU. As such, there is widespread support for the project among local residents, politicians at varying levels of government and the Spanish media.
Large investors also back the project and major institutions, such as Fidelity, River & Mercantile, Majedie, Anglo Pacific and Resource Capital Funds, own a majority of the shares.
Last year, it received an investment of up to $120 million from the sovereign wealth fund of Oman. This investment, made at a time when the uranium price was at a 12-year low, was a strong endorsement of the economics of the Salamanca project.
More recognition came last year when Berkeley Energia was awarded the Mines & Money 2017 Corporate Development Award for its efforts with the mine, fighting off tough competition from other top mining groups.
Salamanca is the only uranium mine in the world currently under construction. But Berkeley Energia is continuing with its exploration programme, looking for further high-grade deposits, some intersections of which have been reported.
Chief executive Paul Atherley says this strategy will be key to maintaining employment and the positive impact of the mine in the area.
“We are starting with an anticipated mine life of 14 years, but it is an historic uranium mining area that has considerable geological potential,” he says. “Part of our sustainable business plan is therefore to keep reinvesting in exploration to maintain the mine life.
“This investment will help us generate income, and maintain employment and investment in the area for a considerable time. We have a large landholding in the area, and as long as we are smart geologically, we will be able to maintain the operation and investment in the community.”
Mr Atherley says the mine’s positive impact on the community will be dramatic.
“Because it has such high unemployment, the region has suffered alarming levels of depopulation as people leave to work in cities,” he says. “Some villages have lost 75 per cent of their population in 25 years. We are investing €250 million.
“We have employed 68 people on the Salamanca project already and plan to increase that quickly when we move into production, as well as creating up to 2,500 indirect jobs during construction. That should also bring a supporting economy with it, helping to stem that depopulation.”
He adds that Berkeley Energia’s commitment to the local communities extends before and after operation of the mine; the company already provides free wifi for local villagers, and is a significant contributor to schools and recreation facilities in the area. On site, the mine will be continuously rehabilitated, leaving a positive legacy in the region.
“We are a temporary land user, but will give our local communities something better when we leave,” he says.
Lack of transparency has been an issue for investors in some mining companies, but Mr Atherley highlights that the project is listed in London,
so will have all the associated disclosure requirements.
“We will have full disclosure on all the important issues, including environment, relationship with government and regulators, and employment of gender and minorities to name a few,” he says. “We also invite politicians and other interested persons to the site. Once they see the operation and meet the team they go away happy.”
