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State rejects Australian firm's uranium bid

Government could explore Rožná's reserves next year

By Paul Voosen
Staff Writer, The Prague Post
February 28th, 2007 issue

VLADIMÍR WEISS/THE PRAGUE POST
Rožná is turning a profit for the first time in years, giving state company DIAMO, which owns the mine, the profits needed for expansion.
In an unexpected move, the Industry and Trade Ministry has rejected a bid from an Australian company vying to invest in the Rožná uranium mine and now wants to explore the mine for additional reserves on its own.
At press time, the ministry still had not notified Australia’s Uran Limited of the decision. The ministry announced Feb. 23 that state-owned mining company DIAMO, which currently operates the mine, would put together a proposal that could eventually lead to its expansion.
“The Australian company’s interest in investing in Rožná shows that it makes sense to continue uranium extraction,” said Industry and Trade Minister Martin Říman during a visit to the mine. “The offer made by Uran is interesting, but we will secure both extraction and exploration by ourselves.”
Rožná, located in west Moravia, is one of the European Union’s last active uranium mines. With uranium prices spiking to $75 per pound (728 Kč per kilogram) and expected to grow higher in the future — driven by an expected worldwide rise in nuclear power production — the mine has begun to turn a profit for the first time.
Kate Hobbs, managing director of Uran Limited, said she was shocked to find out through a press release that the ministry had rejected the company’s bid and had released the financial details of the bid to the public.
“Obviously we’re disappointed, but we’re still unclear as to what it really means,” she said.
The company froze the sale of its shares on the Australian Stock Exchange while it awaited an official response.
Hobbs provided The Prague Post with details of her company’s bid, since initial financial figures had been made public by the ministry. “This isn’t information we’d normally release,” she said.
Uran submitted two proposals to the Czech government. In the first, for a 50 percent share in all future mining and exploration at Rožná, Uran would have invested 640 million Kč in the mine. The second proposal would have sought 50 percent interest in all mining done beyond the current known reserves, with Uran offering 320 million Kč in investment financing and absorbing the risk that it would find little new uranium.
Hobbs is hopeful that DIAMO will need a private partner if it is successful in its exploration for uranium below the mine’s current floor, 1.2 kilometers (0.75 miles) underground.
“We still think we have a great deal we could bring to DIAMO,” she said, particularly in funding capital improvements that could reduce the price of hauling uranium ore up from the deep.
Bedřich Michálek, deputy director of the Rožná mine, supports the ministry’s decision and thinks exploration will reveal that reserves of uranium are still quite high. By the ministry’s order, DIAMO is drawing up a plan for exploration work to begin next year.
Michálek expects the project will cost 30 million Kč, which DIAMO will be able to pay with profit generated through the soaring price of its uranium sales.
Still, if more uranium is found, Michálek said DIAMO could require more financial help.
“For exploitation, it’s possible that we will need money from Uran or another company,” he said. “But not right now.”
Green concern
Any extension of the mine would depend on government approval, said Říman, which is no certainty when the governing coalition includes the Green Party.
The Greens are strongly opposed to any support of nuclear power — foreswearing development of new nuclear reactors at Temelín was a condition of the coalition agreement — and this could extend to Rožná. The mine supplies one-third of the uranium used to fuel the country’s two nuclear power plants.
“We don’t support extending the uranium mining at Rožná,” said Eva Rolečková, spokeswoman for the party.
“The current technologies used for mining are not environmentally friendly and their impact on nature is negative,” she said.
Whether the government approves of an extension or not, it is clear that, during communism, the country was stripped of an enormous mineral resource. The Czech Republic is the fifth-largest all-time producer of uranium, and it exported almost all of its uranium to the Soviet Union at cut-rate prices.
“Today, this quantity of uranium would be worth more than 470 billion Kč,” said Říman.
Hela Balínová contributed to this report.

Paul Voosen can be reached at pvoosen@praguepost.com


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