Saskatchewan's powerful resource1 January 2002
The Saskatchewan uranium mining industry has invested more than C$1 billion ($670 million) to bring a new generation of large, high-grade uranium mines into production. The geology, people, mining industry and government all support the aim of maintaining Saskatchewan as the foremost source of new uranium production for the world. By Eldon Lautermilch
The Saskatchewan, Canada uranium mining industry has a number of strengths that contribute to its prominence in the uranium production industry. These strengths include:
• Large, high-grade resources.
• Significant geological potential.
• Production costs among the lowest in the world.
• Good working relationships with regulators.
• A regulatory environment undergoing streamlining.
• A strong commitment to communication.
• A long history of safe operations.
• Strong public support.
• Support by the provincial government.
While most other jurisdictions in the world are faced with ongoing concerns and protests associated with the nuclear industry, uranium mining in Saskatchewan continues to enjoy a high level of public support. In fact, in Saskatchewan, some of the highest levels of support for mining come from communities in the region of the mines.
Geologists and uranium mining companies throughout the world recognise that the Athabasca Basin of northern Saskatchewan has tremendous potential for the discovery of more large high-grade uranium deposits. Companies that wish to continue in the business must replenish resources depleted through the mining process. Therefore, exploration reflects the state of the market on a broad scale and, for individual companies, their view of the urgency with which they must replenish their uranium resources. Exploration for new uranium deposits in Saskatchewan continues, but at reduced levels compared to previous years.
With total uranium reserves and resources of more than 950 million lbs U3O8 (365,000tU) (as of 31 December 1999) and prices for uranium near historic lows, uranium exploration has become focused on the long-term future rather than an aggressive pursuit of new mines in the shorter term. Under such a strategy, companies continue to explore primarily to retain their talented geoscientists, land holdings and reserve base in the Athabasca Basin. Saskatchewan Energy and Mines requires that exploration work be undertaken to retain mineral rights.
Despite the modest levels of exploration activity, positive exploration results continue to be obtained in a number of regions of the Basin. Recent drilling in the vicinity of La Rocque Lake, part of the Dawn Lake joint venture involving Cameco, Cogema Resources and PNC Exploration (Canada), has found intersections with grades up to 30% U3O8 at depths of approximately 280m, shallower than McArthur River and Cigar Lake.
Cameco continues to carry out the majority of its uranium exploration in the eastern Athabasca Basin. Its Saskatchewan exploration expenditures for 2000 were C$6 million ($4 million). In the early part of 2000, Cameco was active at several projects including seven with diamond drilling programmes. Cameco drilled approximately 17,500m in 56 holes. Additional drilling of the La Rocque Lake area recommenced in June 2000.
Cogema Resources also operates a substantial exploration programme in the Athabasca Basin. The company has varying levels of participation in nearly all of the promising exploration programmes in the basin and its Canadian uranium exploration budget was in the range of C$7 million ($4.7 million) in 2000. One of the company's more promising developments is at Shea Creek, 15km south of its Cluff Lake operation. Results from drilling at Shea Creek continue to be positive, as they have been for several years. Massive pitchblende has been found, up to 6m in thickness, at the unconformity between the sandstone of the basin and the basement rock in addition to perched mineralisations 30 to 40m above the unconformity and high-grade veins within the basement rock. However, the target is very deep, occurring at approximately 700m. Continued exploration success and improved economic conditions are two of the necessary requirements for development to proceed.
Cogema Resources' drilling technology used in this exploration programme is an example of high technology applied to mineral exploration. This innovative approach, called navigational drilling (or navi-drilling), holds great promise for the reduction of deep exploration costs. Navi-drilling allows operators to begin drilling a new hole 500 to 600m below the surface by using a pre-existing "pilot hole". This technique significantly reduces costs and environmental impact as the same pilot hole is used for up to six navi-drilling holes.
In addition to the major uranium-producing companies, junior companies have been quite active in uranium exploration in the Athabasca Basin in recent years. In particular, JNR Resources has been exploring a large aero-magnetic anomaly in the vicinity of Moore Lake, together with Kennecott Exploration Canada, a subsidiary of Rio Tinto.
Promising exploration results point to the enormous potential of the Athabasca Basin for further uranium developments. However, given the long lead times between first discovery of a deposit and development of the mine - up to 20 years - we need to begin the hunt for the deposits that will replace the mines now under development in Saskatchewan. It is easy to forget that the uranium deposits now coming into production were discovered in the 1970s and 1980s. Deposits such as McArthur River, McClean Lake, Cigar Lake and Midwest, that are high grade and relatively compact in area, really are the proverbial "needle in the haystack". The diligence and perseverance of the uranium mining industry in finding them is commendable.
Operating mines and new developments
Saskatchewan is, and will continue to be, home to the most impressive uranium mines in the world.
Key Lake has been the largest uranium mining and milling operation in the world producing 14 million lbs U3O8 (5400tU) per year and more than 190 million lbs U3O8 (73,000tU) over its 15-year life. However, as happens with all deposits, its reserves have been exhausted. Processing of ore stockpiled from the Deilmann pit is virtually complete. At Rabbit Lake, which has operated for 25 years, mining of Eagle Point was suspended, but the mill continues to process stockpiled ore on a half-time basis.
Operations at Cluff Lake will be suspended in 2002. After producing more than 50 million lbs U3O8 (19,000tU) during 20 years of operation, the suspension was triggered by economic conditions and the lack of tailings capacity at the mine. Based on present knowledge of reserves available to the mine and current uranium prices, it is not economic to develop a new tailings management facility. Regrettably, approximately 9 million lbs U3O8 (3500tU) will be left in the ground at Cluff Lake. Cogema Resources has indicated that it will keep open the option to restart milling operations for a number of years.
Two new mines saw the start of operations in 1999 - McClean Lake in June and McArthur River in December. These operations have encountered some unanticipated challenges during construction and initial operations, which have now been resolved. Challenges at McClean centred on the construction of the tailings disposal facility. At McArthur River there was a problem addressing high groundwater pressures and the interaction of the freeze process with clays associated with the ore in obtaining the proper size ore fragments for the underground crushing and grinding process. A further challenge at McArthur River related to the shipping of ore in slurry form to Key Lake and settling problems in the slurry container.
Uranium production in Saskatchewan is forecast to increase to a maximum of 42 million lbs U3O8 (16,000tU) annually, more than a 30% increase over the historic capacity of Saskatchewan mines when the new operations reach capacity production. It is anticipated that this level will be reached in 2005.
These new mines employ leading-edge technologies in their operation. At McClean Lake, the new mill represents the state of the art in processing uranium ore. Special features that the mill incorporates in its design include concrete shielding of tanks to limit radiation exposures from processing solutions, highly computerised processes, and an impressive air circulation system that is designed to limit exposures to radon. At the McArthur River mine, virtually every component of the mining process is remotely operated. Not only is the ore mined remotely, but the mine also incorporates an underground grinding circuit that allows the ore to be pumped to surface in a slurry form. The freezing plant at McArthur River that is used to freeze the ore body before it is mined has the capacity to provide ice for 16 skating rinks. In addition, every aspect of the McArthur River and McClean Lake mines is designed to contain and treat all water flows, from groundwater to rain.
Cigar Lake has undergone a change in operational plans. Based on current uranium market conditions the joint venture participants do not see a need to rush into development of the mine. Cigar Lake is now forecast to commence commercial production in 2003, subject to market conditions. Initially, plans called for the expansion of milling capacity at McClean Lake to 24 million lbs U3O8 (9200tU) annually to handle the ore feeds from McClean Lake, Cigar Lake and Midwest. However, this has now changed to a proposal for processing 57% of the ore at the Rabbit Lake mill and the balance at the McClean Lake mill, which will have a capacity expansion of 6 million lbs U3O8 (2300tU) annually.
In addition, the original plans were adjusted to allow for disposal of the waste rock from Cigar Lake in the mined-out Sue C pit at the McClean Lake mine, 75km from the Cigar Lake site. This change alone is forecast to add C$28 million ($19 million) in costs to Cigar Lake operations, but will reduce environmental impacts considerably. Because both these proposals represent significant changes to the operating plans for the Cigar Lake mine, environmental legislation of the province and the federal government requires that the company prepare an environmental impact statement of the proposed changes.
To provide an indication of the magnitude of the new deposits, McArthur River and Cigar Lake will only need to mine and process 100 to 150 tonnes of ore per day to produce 18 million lbs U3O8 (6900tU) per year. This is less than the amount that can be produced in one shift at the mine. In terms of the in-ground value of the ore, McArthur River resources of 483 million lbs U3O8 (185,000tU) (as of 31 December 1999) at current, low spot market prices are worth about C$6 billion ($4 billion).
Before the ore from McArthur River and Cigar Lake is processed, it will be blended down in grade using low-grade waste rock or lower grade ore. This is probably a first in the world, diluting ore for processing operations.
Examining the contained mineral value per tonne of ore is another interesting comparison. Using this evaluation, it is possible to compare between different mineral commodities. The contained value per tonne of ore for the Ekati Diamond mine that recently opened in northern Canada is approximately C$149/tonne; for the Voisey's Bay nickel deposit in Labrador it is in the range of C$334/tonne; for the McArthur River uranium mine it is more than C$4700/tonne and for the Cigar Lake deposit it is more than C$4400/tonne. At this level of contained value, it appears that few mineral deposits in the world, including other uranium deposits, will be able to compete with Saskatchewan's uranium deposits.
As a result of the high ore grades and extensive uranium resources, the Saskatchewan uranium mining industry is known to have among the lowest production costs in the world. However, if recent market prices are sustained for a long period, they will be a challenge even for low-cost producers. The current low prices appear to be a result of perceptions of an abundant supply of secondary sources of uranium in the world and widespread reliance on those sources.
Apart from ongoing capital and operating costs, the uranium industry in Saskatchewan has invested about C$1 billion ($670 million) to bring the McClean Lake and McArthur River deposits into production. The Cigar Lake and Midwest deposits represent more than C$500 million ($330 million) in further investment. For mining to be sustainable, companies must be able to provide a return to their investors that is substantially higher than current interest rates. Such a return is necessary to compensate the investor for the risk that is associated with the mining industry.
The Saskatchewan uranium mining industry met stringent environmental and worker health and safety standards. The provincial government actively encourages and supports uranium mining on the basis of a proven track record. This means that uranium mining companies must:
• Protect the environment.
• Protect the health and safety of workers.
• Provide an appropriate distribution of socio-economic benefits.
As these objectives indicate, socio-economic factors are considered together with worker health and safety and environmental protection very early in the evaluation of new mine developments. Through a rigourous and public review process, the uranium mining industry demonstrated that the impacts of the new mines would be minimal and short-term, while the socio-economic impacts would be significant for the economy of northern Saskatchewan and the province as a whole.
With respect to exposure to radiation, the average exposures and maximum exposure of workers to radiation are a fraction of the allowable limits that are based on the ICRP 60 and 65 recommendations. All other emissions from the mine sites are within allowable limits.
Provincial government initiatives
The government of Saskatchewan supports its uranium mining industry and is actively working to ensure its long-term viability. For the uranium mining industry to flourish, it is crucial for the provincial government to ensure that the regulatory and investment environment in which it operates is efficient and positive. The government has a number of initiatives in place that are designed to maintain strong public support for the industry and to ensure an optimal operating environment.
Providing geoscience information
The government of Saskatchewan recognises its role in providing geoscience information that is valuable to the mining industry, and it works closely with the industry in establishing exploration programmes. To investigate the potential of the Athabasca Basin for new uranium deposits further, a new funding programme for geoscience investigations into the nature of Saskatchewan uranium deposits has been announced. The purpose of this research initiative is to improve our understanding of the nature and formation of Saskatchewan uranium deposits and, at the same time, address industry's need for new exploration technology to aid in the transition from shallow to deeper basin exploration.
Communications and public input
It is vital that environmental protection and worker health and safety information be communicated. The flow of information to and from communities in the vicinity of the uranium mines is recognised as a critical factor in the future of uranium mining in Saskatchewan.
Streamlining the regulatory environment
The provincial government is very concerned with the cost to the uranium mining industry of regulatory overlap and duplication. Both the federal and provincial governments have regulatory responsibility for the operation of uranium mining and milling facilities. As a consequence, each conducts similar regulatory activities for similar, but not identical, standards. This results in considerable confusion for industry and places undue costs on uranium operations.
The problem has existed in Saskatchewan for many years, but recently a number of events have occurred that have spurred activities to resolve the issue. These include:
• The profile given to the issue by the public review process.
• The development of the Nuclear Safety and Control Act that replaced the Atomic Energy Control Act and which provides for the incorporation of provincial legislation in federal regulations for administration by the responsible provincial agency.
• Ongoing efforts by provincial officials to ensure the issue is addressed.
• A government-wide initiative to address regulatory issues that place an undue burden on industry.
Decommissioning and reclamation of mines
Current uranium mines are required to provide financial assurances in the form of funds, bonds, insurance, or other fiscal options which ensure that, following operations, the site is returned as closely as possible to the natural conditions that existed before mining commenced.
This was not always the case. Early mining activities in the province occurred with little or no environmental controls and no planning for the eventual decommissioning or reclamation of the mine sites. Often, the end of a mining operation was signalled by the bankruptcy of the mine operator and the abandonment of facilities.
Competitive investment environment
Saskatchewan recognises that an attractive investment climate is a necessary supplement to its outstanding geological potential and the well-developed mining infrastructure if it is to compete with other jurisdictions in attracting new investment. Saskatchewan is currently pursuing this objective on two fronts. Firstly, officials in the Department of Energy and Mines and the Department of Finance are working with representatives of the mining industry. They are reviewing the full range of taxes that apply to the mining industry and examining opportunities to improve the competitiveness of the investment environment in the province.
The uranium mining industry is a leader in Canada in developing innovative ways to attract and retain Aboriginal employees in its operations and in directing economic opportunities to businesses and communities in the north.
The uranium mining industry and the Government of Saskatchewan continue to work together to provide opportunities for northern Saskatchewan residents and businesses to benefit from the economic opportunities provided by the industry. Northern Saskatchewan offers few economic opportunities for residents beyond limited traditional occupations of trapping and fishing. The uranium mining industry represents a major component of the northern economy. Unemployment rates in many communities are extremely high.
In particular, the Multi-Party Training Plan (MPTP), an education and training initiative that involves northern communities, the uranium mining industry and the provincial and federal governments working together is very successful. Training programmes are developed for identified opportunities and timed to a detailed forecast need for those occupations in the industry. Training not only involves theoretical instruction, but also involves counselling and significant practical experience at one of the operating mines. The MPTP was initially established for a fixed, five-year term. It has been renewed for a second term following the initial term in which all the targets of the plan were not only met, but exceeded. This training model is now being applied to other sectors of the economy, such as forestry, in attempts to duplicate its successes.
As a result of these efforts, employment of northerners and, in particular northerners of Aboriginal descent, has increased significantly at the mines. Northerners now make up approximately 50% of the uranium mine site workforce. In addition, through other initiatives, the value of contracts to supply goods and services to the mines has also increased.
The uranium mining industry in Saskatchewan enjoys a high level of trust and support by the people of the province.
Cameco and Cogema Resources conduct an annual poll of Saskatchewan people on their perceptions of the uranium mining industry. In terms of the level of support for the uranium mining industry, 70% of the people polled in 1999 were either very supportive or somewhat supportive. This support increased to 80% when people learned that nuclear power plants do not emit greenhouse gasses that contribute to global warming. While 62% of the people were concerned about the environmental impact of the uranium mining industry in Saskatchewan, this was considerably lower than the level of concern with the forest industry (74%), the oil and gas industry (74%), and the agriculture industry (72%).
These are very impressive levels of support for any industry. They also demonstrate that over time it is possible to build and maintain a strong base of support for this component of the nuclear fuel cycle. The lessons learned from the uranium mining industry in Saskatchewan may be transferable to other components of the nuclear fuel industry. The future of the nuclear industry ultimately depends on the support of the public and Saskatchewan's uranium mining industry is an example of one component of the industry that has got things right.