Argentina’s Putin-backed nuclear plan carves out opportunity for uranium miners
Austrian scientist Ronald Richter, a nuclear physicist, left Germany following World War II and got an audience with Argentine President Juan Domingo Peron to develop his invention, the Thermotron. Peron gave Richter Argentine nationality and put him in charge of a nuclear fusion experiment.
The experiment didn’t pan out, but Argentina’s nuclear legacy has endured, with three reactors in operation and plans to build more. Deep energy shortages linked to a lack of investment in natural gas fields in the South American nation, and an agreement with Vladimir Putin, may mean Argentina is on the cusp of expanding its nuclear power industry and mining abundant uranium resources.
The Putin agreement appeared to benefit two uranium mining companies – Uranium One and UrAmerica – who were both present during an official state visit by Argentine President Mauricio Macri to the Kremlin earlier this year. But the agreement could also lead to the development of Blue Sky Uranium Corp.‘s (TSXV: BSK | OTCQB: BKUCF) major Amarillo Grande discovery.
“This positions our company in a very favourable light,” Blue Sky CEO Nikolaos Cacos told InvestorIntel. “We are receiving a lot of support from both federal and provincial governments,” he added.
The protectionist policies of Cristina Fernandez de Kirchner, and her predecessor and husband Nestor Kirchner drove energy companies out of Argentina, causing a massive energy deficit that requires Argentina to import huge amounts of liquefied natural gas (LNG) to run its power stations. Blackouts are commonplace in Buenos Aires.
Nuclear provides a short-cut solution to this problem. Despite opening up Argentina to the world in his 2015 election as Argentine president, Mauricio Macri nurtured a relationship that Fernandez had cultivated with Putin. That relationship bore fruits this year when both countries announced that Russian state nuclear company Rosatom plans to build a nuclear reactor in Argentina.
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Currently Argentina imports 250 tonnes of uranium per year, which is used to feed the country’s three existing nuclear reactors (Atucha I, Atucha II and CN Embalse). Argentina is mulling over adding more of its own reactors.
Blue Sky Uranium, a Vancouver, Canada-based exploration company that is part of the Grosso Group, holds exclusive rights to 428,000 hectares to explore in two provinces in Argentina – Rio Negro and Chubut.
At the flagship Amarillo Grande project in Rio Negro, drilling in 2016-17 at the Ivana site led to a March report showing uranium resources with high grades as well as significant amounts of vanadium. Vanadium in its own right is an exciting commodity and is in the spotlight for its potential use in energy storage batteries.
According to Cacos, Argentina would need 1 million pounds a year of uranium, from the current 500,000 pounds a year to feed the country’s future nuclear power needs. Imports are currently arriving from Canada and Kazakhstan.
Besides using nuclear as providing a domestic power source, more reactor capacity could help Argentina government reduce CO2 emissions to honor the terms of the Paris agreement.
Prices for uranium have not been great in recent years, plummeting from highs of almost US$140/lb in 2007-2008 to just above US$20 in 2018, according to UXC consulting company.
Some of the most high profile uranium mines have closed including the world’s highest-grade uranium deposit, the McArthur River Uranium Mine in Saskatchewan, Canada.
But there is some momentum and prices are rising again.
Amarillo Grande has near-surface ore, meaning it’s a low cost. The company also has close access to transport infrastructure and identified a maiden resource of 19 million pounds. This could be quintupled through exploration, Cacos said.
“This could be one of the lowest cost producers in the world,” he said. “We are embarking right now on preliminary economic assessment targeted for the fourth quarter of this year. We are confident that we can demonstrate the low cost of production this year.” Adding that rising uranium prices and the realization of Argentina’s nuclear plan “might attract some very serious economic interest to our project.”
Matt Craze has covered commodity markets for more than 20 years, working as a researcher at CRU International, and for over 10 years as a ... <Read more about Matt Craze>