Uranium produced at a Victorian rare earth mine could be heading to US nuclear power sector

Australian rare earth deposits are being targeted by offshore buyers for their uranium content, with a US producer buying into a Victorian project.

Uranium exported from a rare earth mine in Victoria could be destined for us in US nuclear power stations. AFP PHOTO / RHONA WISE

Australian rare earth deposits are being targeted by offshore buyers for their uranium content, with US uranium producer Energy Fuels talking up the value of the uranium in a Victorian mineral sands and rare earths project it is buying into.

But comments made by Energy Fuels that it intends to process and sell the trace levels of uranium in earth concentrate exported from the Donald mineral sands project in Victoria — rather than dispose of uranium as waste — are likely to trigger increased levels of regulatory scrutiny on the project, and again highlight the political tensions over opening up Australia to new uranium mines.

The Donald project is owned by ASX-listed Astron, which has spent more than 15 years working to develop the mineral sands operation in western Victoria. Late last year Astron announced a non-binding deal with Energy Fuels, with the US uranium company to invest $180m to develop the project in exchange for a 49 per cent stake.

Astron plans a 7.5 million tonne a year mining operation at Donald, producing 200,000 to 250,000 tonnes per year of heavy mineral concentrate and about 7,000 to 8,000 tonnes a year of rare earth element concentrate.

Energy Fuels is one of a suite of US companies looking to enter the rare earth processing market, with the company expanding its US uranium processing facility to allow the extraction of rare earth oxides for sale.

The company has only recently returned its US uranium operations to production, saying in its September quarter report it had sold 180,000 pounds of uranium to a US nuclear power station.

In December Energy Fuels said the development deal secured its access to the rare earth concentrate and, in addition, provided an extra 50,000 to 100,000 pounds of “low-cost” uranium supply to its US uranium mines.

That is the equivalent of about 45 tonnes a year of uranium. As a comparison, BHP’s Olympic Dam copper, gold and uranium mine produced 986 tonnes of uranium in concentrate in the final three months of 2023.

At the time Energy Fuels boss Mark Chalmers said the rare earth deal “perfectly complemented” the company’s uranium mining and processing operations.

“Rare earth elements and uranium production go hand-in-hand, as the concentrate from the Donald project contains decades of low-cost recoverable uranium, which perfectly complements the company’s large-scale uranium production,” he said.

“While this represents only a small part of our total uranium production, these pounds of uranium are very valuable to us because their incremental cost of production is expected to be very low, while providing a secure source of uranium for the generation of clean, carbon-free electricity in the US.”

Almost all Australian rare earth deposits come with trace levels of uranium and other radioactive materials such as thorium.

Victoria has banned uranium mining, but exceptions are available under state laws if the uranium content of the deposit is below 0.02 per cent.

But the fact that Energy Fuels has talked up its plans to also process the uranium mined in Victoria is likely to trigger additional federal regulatory scrutiny on the project, with both export permits and the potential for fresh federal environmental approvals required for the project.

Astron managing director Tiger Brown told the Australian the company was in the process of preparing the way to apply for export permits, and said the knowledge that Energy Fuels could process and sell the project’s trace uranium to nuclear power stations of a close ally such as the US — rather than simply disposing of it in a radioactive waste facility — was an attraction of the deal.

“The project and its products are under the relevant Victorian radioactivity thresholds. On a total mined volume basis, the uranium content of 9 parts per million (0.0009 per cent) is well under the regulatory limit,” he said.

A spokesman for federal resources minister Madeleine King said export permits for rare earth concentrate usually required assurances that uranium and thorium will not be extracted for nuclear purposes, but that the legislation gave the minister the power to allow their use in the nuclear fuel chain.

“Export requests are considered against a range of factors, including whether the nation has a Nuclear Cooperation Agreement with Australia that provides treaty-level commitments that Australian-origin material will remain in peaceful use and that appropriate safeguards and reporting frameworks will be implemented,” he said.

“Prior to approval, the Minister or authorised person would need to be satisfied that appropriate mechanisms are in place to ensure that any extracted nuclear material would only be used for peaceful purposes. This process involves extensive consultation with the Australian Safeguards and Non-Proliferation Office (ASNO) who manage Australia’s network of nuclear co-operation agreements and associated reporting arrangements.”

But the use of the uranium as a fuel could also trigger the requirement for fresh federal environmental approvals, despite Donald already having received federal approvals under the federal Environment Protection and Biodiversity Conservation Act (EPBC), under the so-called “nuclear trigger” in the legislation.

A spokesman for the Department of Climate Change, Energy, the Environment and Water said the original 2009 project approval, since extended, allowed the production of a heavy mineral sands concentrate at Donald.

“Any substantial change to this approved action, including uranium mining, will need to be referred for consideration under the EPBC Act in the normal way,” the spokesman said.

Mr Brown said Astron was working with the department on any changes required to the Donald project’s existing approvals.

“The proposed joint venture with Energy Fuels is a significant opportunity for our region and our state. It will be the first critical minerals project to be developed in Victoria. With a multi-decade life, it will create many jobs and build significant economic growth,” he said.