9 September 2009 - Structural changes drive uranium exploration spending lower

The completion of BHP Billiton’s exploration program to confirm the extent of uranium resources available to its Olympic Dam expansion program appears to be the biggest single factor in a decline in uranium exploration expenditure in 2008-09, according to the Australian Uranium Association.

Full year exploration statistics released today by the Australian Bureau of Statistics show a 20 per cent decline in uranium exploration Australia-wide, compared with 2007-08 (from $231.5 million to $185.3 million).

AUA Executive Director Michael Angwin said the largest single in-State decline was in South Australia, where exploration spending dropped 38.5 per cent (to $72.6 million) compared with the previous year.

“This is largely due to BHP Billiton finishing the exploration it needed to do to prove up the resource for the Olympic Dam expansion project,” Mr Angwin said.

“Importantly, this shows that exploration activity is holding up despite the difficult economic circumstances of the last year,” he said.

While generally tighter economic conditions had an effect, the price and demand outlooks for uranium remain very strong, especially in the medium to long term, Mr Angwin said.

He noted that strong spending on uranium exploration in the Northern Territory and Western Australia continued to help offset some of the spending reductions in other parts of Australia. Year on year, exploration expenditure in the Northern Territory increased nearly 12 per cent (to $54.5 million) and in Western Australia by nearly 7 per cent to an estimated $28.6 million.

“The increased expenditure in the Northern Territory reflects greater activity by ERA Limited to prove up resources near its existing Ranger mine, while in WA, companies with potential mines are increasing their exploration activity to confirm their resources following the WA Government’s go-ahead for uranium mining,” Mr Angwin said.

In Queensland, where the Bligh Government continues to prohibit uranium mining, exploration spending over the year was weaker, although with some encouraging signs as spending in the June quarter ($6.3 million) was up slightly on March.

Uranium Exploration: Australia 2003/04 to 2008/09 *

$millions

Queensland

Western Australia

Northern Territory

South Australia

AUSTRALIA

03/04

0.2

0.2

4.8

5.3

10.5

04/05

0.4

0.3

6.9

13.1 (est)

20.7

05/06

4.6

2.2

19.1

30.3

56.1

06/07

9.0 (est)

11.2 (est)

30.1

63.8

114.1

07/08

38.1

26.8 (est)

48.7

118

231.5

08/09

29.5(est)

28.6(est)

54.5

72.6

185.3

*Exploration in Tasmania is negligible. Exploration is banned in NSW and Victoria

Source: ABS 8412.0