S African govt may demand first pick of uranium

CAPE TOWN, Aug 22 (Reuters) South Africa may compel local miners to offer uranium first to the state to feed the country's expanding nuclear energy programme, a senior official said today.

The government announced this month it would ramp up use of nuclear energy as it moves to meet fast-growing demand for power, using the country's large reserves of uranium.

''The intervention in the uranium market (is necessary) ...

there is no way we can have a situation where we battle for uranium, to get uranium ore, when our country is actually exporting,'' Tseliso Maqubela, chief director for nuclear energy at the department of minerals and energy, told legislators.

A proposed enrichment programme, heavily biased towards reprocessing used fission material, was needed to power the country's nuclear plans, he said. These see nuclear power rising to 15 per cent of total supply from the current 6 per cent.

The National Energy Corporation of South Africa (Necsa) would be charged with reigniting its now defunct uranium enrichment facilities, with a projected 663.5 million rand 90.11 million dollars expenditure by 2011 needed to fund its capital and infrastructure upgrade, including a conversion and enrichment project.

Necsa's chief executive, Dr Rob Adam, told legislators that by enriching uranium, South Africa could maximise its earnings in export markets.

''Long-term uranium price buoyancy means nuclear fuel cycle investment is attractive,'' Adam said.

South Africa, one of the biggest producers of uranium, is building a multi-billion-dollar new technology pebble bed modular reactor (PBMR), and has mooted building more conventional plants to add to its sole facility near Cape Town.

The move towards nuclear technology is driven by local concern over energy sustainability and by international worries over greenhouse gas emissions and climate change.

South Africa's ageing electricity power grid is already struggling to cope with demand, with main cities Johannesburg and Cape Town already suffering intermittent blackouts.

Maqubela said he expected opposition to the proposal to intervene in the market as the country planned to reserve uranium stocks and not allocate all mining rights.

One of the country's top uranium producers, AngloGold Ashanti said the group was not aware of the planned market interventions.

''We have not yet seen details of the proposal and we would need to study this first before making any comment,'' said company spokesman Steve Lenahan.

Maqubela added that mining companies such as Uranium One, AngloGold and First Uranium, were expected to increase output significantly to exploit soaring uranium prices. South Africa needed to position itself to take advantage of a global nuclear revival.

''There is a growing nuclear energy sector globally, and we need to tap into that market. We need to position South African industry to be able to play in that space,'' he said.

REUTERS GT RK2250