hansard senate hearing excerpt re eps and mulga ro Key Hansard...

hansard senate hearing excerpt re eps and mulga ro Key Hansard Senate hearing excerpt herewith of interest to EPS holders/investors re
what sort of results, and possible resource discoveries, to expect in the future from EPS Balladonia exploration -via EPS quoted comparison and identical similarities of Balladonia mineralisation to that of Mulga Rock next door. Intriguing read with endless possibilities ahead IMO. As follows:

COMMONWEALTH OF AUSTRALIA
Official Committee Hansard
HOUSE OF
REPRESENTATIVES
STANDING COMMITTEE ON INDUSTRY AND RESOURCES
Reference: Developing Australia’s non-fossil fuel energy industry
FRIDAY, 23 SEPTEMBER 2005
PERTH
BY AUTHORITY OF THE HOUSE OF REPRESENTATIVES

FEWSTER, Mr Michael Edward, Manager, Eaglefield Holdings Pty Ltd
CHAIR—I welcome our next witness. Thank you for agreeing to appear and give evidence at
this public hearing. Although the committee does not require you to give evidence under oath, I
should advise you that the hearings are formal proceedings of the parliament and that the giving
of false or misleading evidence is a serious matter and may be regarded as a content of
parliament. I further remind you that the committee prefers that all evidence be given in public.
However, at any stage you may request that your evidence be given in private and the committee
will consider your request. I invite you to make a short opening statement before we proceed to
questions.
Mr Fewster—Firstly, I extend my gratitude for being offered an invitation to address the
committee. My company, Eaglefield Holdings, is a privately funded company. We have been
operating for about 18 years in undertaking exploration out in the far-eastern regions of the
goldfields of Western Australia. Over that time we have come to understand the geology of the
area particularly well. Fortunately, about five years ago, we were able to acquire ownership of a
known uranium polymetallic deposit, previously known as the Mulga Rock deposits. We have
elected to retain that name. The Mulga Rock deposits are a large uranium resource, possibly the
second or third largest known uranium resource in Western Australia. More interesting are the
commodities associated with the Mulga Rock uranium itself. It is a polymetallic deposit, of
which scandium is the most significant.
The theme of my submission is that uranium deposits in Australia, and certainly in Western
Australia, are significant. Obviously, they are of value to the nation and of value around the
world for greenhouse gas abatement, but my submission is more about the fact that uranium
deposits quite often have associated with them other commodities and those commodities clearly
have significant value. Secondly, uranium deposits tend to be located away from typical mining
areas. As a consequence of that, the development of uranium deposits, particularly in WA, would
see the development of infrastructure in parts of Western Australia which are presently devoid of
any infrastructure. I am talking primarily about access, accommodation and other types of
infrastructure. A consequence of the installation of that infrastructure would be to allow the
development of other resource projects of great benefit to the region.
Our deposit, as I said, is located out in the far-eastern goldfields region. It is about 250
kilometres from Kalgoorlie-Boulder. It is in what is generally referred to as the Gunbarrel Basin,
which is known to be a very substantial reservoir of water. It would have the capacity to supply,
for example, the eastern goldfields region with water. The main impediment, of course, is that to
develop a water-supply system out of the Gunbarrel Basin to the goldfields region is simply
vastly too expensive at present. However, if there were infrastructure in the region, then the cost
of that would be clearly offset.
Moving back to the Mulga Rock and its polymetallic association, the most important being
scandium, scandium is possibly the world’s rarest but most keenly sought industrial commodity.
Historically, its use is in the manufacture of aluminium alloys. It is universally regarded as the
optimum alloying material for aluminium. It is particularly sought by the aerospace industry. The
aerospace industry around the world, both military and civilian, has investigated scandium
Friday, 23 September 2005 REPS I&R 25
INDUSTRY AND RESOURCES
alloys. In fact, it was first created by the Soviet Union as one of their key products to try and
maintain parity with the United States in the manufacture of aircraft—the MiG-29E was made
from a scandium aluminium alloy. There has been a huge amount of research conducted—all the
major aerospace manufacturers have investigated scandium alloys and papers have been
published on the benefits that it would bring.
Effectively, scandium alloys would allow the manufacture of aircraft by welding the panels
together in much the same way as ships are built today—the pieces are welded together. Aircraft
are still manufactured effectively along the same lines as the way the Titanic was made—panels
are made, strengthened and then riveted onto a skeleton. The cost of that in terms of weight,
materials and labour is very high. Airbus have done some work in this area; they published a
paper some years ago to say that aircraft manufactured from scandium alloy would be at least 15
per cent lighter and 15 per cent cheaper to build and, you would have to say, probably 50 per
cent stronger than a conventional aircraft. There are other applications for scandium alloys as
well, but that is really where the main application lies.
Until about a year ago, our main focus on the Mulga Rock deposit was its scandium
component. We have spoken to and had dealings with quite a large number of organisations
associated with the aluminium or aerospace industries, so we have a fairly good knowledge of
what is actually happening. Effectively, the industries will not or cannot go near the scandium
alloys until there is a major supply established somewhere in the world. When I say ‘major
supply’, I mean that at present there are only two tonnes of scandium oxide produced from
mines around the world—
Mr HAASE—Per annum?
Mr Fewster—Yes—two tonnes of scandium oxide per annum. A further three tonnes are
taken from a stockpile in Russia that is a sort of leftover from the Soviet era. So there are about
five tonnes of scandium oxide going into the market per year at the moment. Virtually all of that
is going into the aluminium alloy industry. It is used primarily, at the moment, to make things
like baseball bats, bicycle frames and a few bits and pieces, but really nothing very significant—
certainly not in aerospace.
From the discussions that I have had with people in the aluminium and aerospace industries,
they are suggesting that aerospace alone would probably consume 50 tonnes of scandium oxide a
year. It would probably consume more, but realistically there can be no substantial scandium
industry in the world until what is referred to as a critical mass of production is reached. Our
best guess is that that is about 150 tonnes per year. So somewhere in the world there has to be a
source that can deliver 150 tonnes of scandium oxide for a lengthy period of time at a very low
cost such that, once that supply has been established, the potential consumers can start to retool
to utilise the scandium.
Scandium oxide alone is, in fact, useless to the aluminium and aerospace industries. It has to
be refined into an intermediate product called ‘master alloy’. Effectively, it is just the conversion
of the scandium oxide into a metallic form. Scandium master alloy typically contains about two
per cent scandium. This metal sample I have here is a sample of scandium master alloy. It
contains two per cent scandium. It is a very, very complicated process to convert scandium oxide
into this metallic form. There is effectively not a plant in the world at present that can actually do
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it at a commercial scale. There is a very antiquated facility in Russia that the Soviets built for
their supplies. At present there is only enough capacity in the world to produce about 100 tonnes
of master alloy a year and, again, a critical mass of master alloy would be in the order of 5,000
tonnes per year.
The retail price of two per cent scandium master alloy at the moment is about $A100 per kilo.
Scandium oxide is worth about $1 million per tonne in the marketplace at the moment. Clearly,
that is at a very small supply. We are working on a cost of potentially half of that or a value of
half of that at a commercial scale but, even so, 5,000 tonnes of master alloy at $A50,000 per
tonne adds up to a fairly substantial amount of money.
Secondly, and more importantly, Mulga Rock is the only exploitable scandium resource in the
world today, in that the scandium is actually recovered at the same time as the uranium would
be. The scandium and uranium are bound up in exactly the same form, so when the uranium is
recovered the scandium comes with it. We have conducted metallurgical work and we know that
we can recover the scandium relatively easily, so in fact we get the scandium for free in the
actual processing operation.
There are larger scandium resources in Australia. There have been deposits announced in both
New South Wales and Queensland. Scandium turns up in nickel laterite deposits as well. The
deposits here in Western Australia have small amounts of scandium in them—only a few tens of
grams per tonne. We think Mulga Rock carries on average somewhere between 200 and 300
grams of scandium per tonne of ore but, as I said, there are deposits in New South Wales and
Queensland which are nickel laterite type deposits that carry similar grades of scandium,
anywhere from 150 to maybe 300 grams per tonne. Those deposits are very large in terms of
their scandium content. The problem they have, though, is that the development of those
resources will need a full nickel laterite facility, which is a $1 billion to $1.5 billion capital
exercise. Of course, those deposits could not be developed until two things are established: a
market for the product in the order of hundreds of tonnes per annum, and a market price for
scandium.
Our work suggests that the potential market for scandium in the medium term is in the order
of 400 to 500 tonnes of scandium oxide per year. Final demand is very much linked to the size of
the aluminium market. Effectively, probably a full third of all of the aluminium produced in the
world—and there is about 25 million tonnes of aluminium metal produced annually around the
world—would benefit from the addition of some scandium. Demand is huge: eight million
tonnes. The alloys that are anticipated for use in the aerospace industry carry about 0.2 per cent
scandium, but multiply that by one million tonnes of aluminium a year and it turns out to be a
very, very large amount of scandium in the context of what we are looking at.
The Mulga Rock deposit has the capacity to be the foundation of a scandium supply industry
in Australia. We anticipate Mulga Rock will supply between 200 and 250 tonnes of scandium
oxide per year for a mine life that could extend to 15 years. Once a market is established, we
would envisage other potential scandium suppliers in WA. Certainly the Murra Murra nickel
laterite project in WA would have the capacity to deliver maybe 10 or 20 tonnes of scandium
oxide per year; Ravensthorpe could deliver some. Then we would see development of other
deposits in New South Wales and Queensland to pick up the slack from what our deposit could
not develop. Very early on in the piece, there would have to be constructed somewhere in the
Friday, 23 September 2005 REPS I&R 27
INDUSTRY AND RESOURCES
world—and we see no reason that this would not be in Australia—a facility for the manufacture
of master alloy. The CSIRO in Melbourne, who I have had some discussions with, are very keen
to participate in that exercise. They are actually developing technology at the moment for
application for producing titanium metal which they think could be adapted to refine scandium.
The Mulga Rock deposits could be the foundation of a scandium supply and processing industry
here in Australia which could exceed the value of the uranium industry. It is potentially a billionplus
dollar industry per year spread right across Australia.
That is what we see as being the most important aspect of Mulga Rock in terms of its coproduct.
From the infrastructure side, there is also a very large resource of what we call oily
lignite—oil rich lignite—in our same lease area. The deposits themselves are hosted by this oil
rich lignite. We have had some preliminary work done on that, and it suggests that potentially it
could deliver upwards of four barrels per tonne of oil by conversion of coal using fairly
sophisticated technology that has not been commercialised yet. But, even using existing
technology, the deposit appears to carry about two-thirds of a barrel of oil per tonne of coal in
the ground. We have not calculated the size of the resource yet, but estimates are that it is in the
order of 250 to 500 million tonnes, so the oil resource potentially within the deposit is in the
order of 500 million to a billion barrels of oil.
There are a number of other oily lignite deposits around Western Australia around the eastern
Goldfields and the Esperance area and from Esperance around through Balladonia. All of them
have one major deleterious element and that is that they are very salty. Processing those lignites
requires the removal of the salt and that requires access to large amounts of fresh water. None of
the deposits in the south have access to fresh water or brackish water. Again, we have a very
large supply of brackish water virtually on site.
We would envisage that, once infrastructure was in place, it will be possible to look at our
resource development. Our development model is to mine the coal, put it in a slurry and pump it
down to Kalgoorlie or somewhere east of Kalgoorlie to some sort of a process facility down
there. By doing that it would allow all the other resources in the area to feed into that same
facility, given that there would also be a supply of fresh or brackish water that would also go
with the coal. Longer term we see this Mulga Rock area as potentially one delivering enormous
benefits. Should there be a mining operation out there, clearly that would be focused on the
Goldfields or on Kalgoorlie-Boulder. That would be our centre of operations, effectively.
Moving forward, we see the potential to use it as a staging point effectively for the delivery of
potable water to the whole Goldfields region. Moving on from there, there is this energy
resource that we have, which is clearly huge in size, which again could be the foundation for a
very large liquids fuel industry in the eastern Goldfields region. We have contemplated and had
discussions with some organisations about the concept of constructing an aluminium smelter in
the Kalgoorlie-Boulder region fed from this obviously huge energy resource that we know is out
in that region. That is something that is still open for more discussion.
That is pretty much where we are at. To summarise, Mulga Rock is a large uranium resource
but really it is the associated scandium that makes it such a strategically important resource—
strategically important at both a national and international level. Scandium alloys obviously have
many military applications. Once it is known that we can produce the product, there will be
some interest from military manufacturers. The Goldfields region will benefit enormously from
I&R 28 REPS Friday, 23 September 2005
INDUSTRY AND RESOURCES
both the mine itself and also the other products, be it water or energy or whatever, that it will
deliver to the Goldfields region.
CHAIR—Thank you. In your submission you make the point that you believe that there is
probably well over 150,000 tonnes of yellowcake in five substantial known uranium deposits in
Western Australia. You further go on to say that in your estimation it could be worth $10 billion,
with royalties to the state of some $30 million. We have had other evidence that puts it a bit
lower than that. On what basis do you put forward those figures?
Mr Fewster—The actual resource on Mulga Rock is about 45,000 tonnes of yellowcake. It
was previously owned by the Japanese government, who tended to understate the size of the
resource. Also, historically, there was a great deal of confusion in the way in which the size of
deposits was quoted. That confusion has now been resolved by the introduction of what is called
the JORC code, which I am sure you will have heard about from a number of the parties—JORC
standing for the Joint Ore Reserves Committee. It sets in place a framework by which you
actually determine the size of a deposit. Using the JORC code, Mulga Rock is about 45,000
tonnes, Yeelirrie is about 55,000, Kintyre is about 35,000, Oobagooma is about 10,000,
Manyingee is about 9,000 and Lake Way and Centipede between them are about another 10,000
tonnes. Then there are a number of other smaller deposits which I think in time will become
viable. Yeelirrie and Mulga Rock are effectively 100,000 tonnes. If you add on Kintyre, that is
135,000. Oobagooma and Manyingee make 155,000.
I think that the number of 150,000 tonnes is on the low side. My thought now is that Western
Australia’s yellowcake resource from a minable reserve is probably more likely to be 200,000
tonnes of yellowcake. Bear in mind that these deposits carry a lot of other commodities. Yeelirrie
is probably the largest vanadium deposit in Western Australia, even compared with Windamurra.
As a resource figure, I think Western Australia has in the order of 150,000 to 200,000 tonnes of
yellowcake. Again, how much of that is recovered over, say, the next 20-year period will be
dependent on mining costs and other factors. Out of Mulga Rock, my estimate is that, of the
45,000-tonne resource, we could recover 15,000 or 20,000 tonnes at present prices, given that
there would be a fairly large contribution from other metals as well. Mulga Rock contains a lot
of nickel, cobalt and vanadium.
The resource figure on Yeelirrie is 55,000 tonnes, but I think most people would expect that to
grow with further exploration. When you bear in mind that there has not been any significant
uranium exploration in Western Australia for 15 years, it is fair to say that, once that exploration
begins again in some earnest, there will be some more discoveries. I am quite comfortable in
saying that as a resource Western Australia has in the order of 150,000 to 200,000 tonnes. The
quoted resource figure on Mulga Rock is about 15,000 tonnes of yellowcake. That was PNC’s
estimate of a minable reserve, and that is the difference—Mulga Rock is a lot bigger than has
been stated historically.
CHAIR—What is your comment on the suggestion that other witnesses have made about
mining for another commodity? Olympic Dam is a good example. It is a copper mine but they
are, of course, getting gold and uranium as well. With regard to mining in Western Australia for,
say, gold, a previous witness said, ‘What do you do with the uranium if the state government
won’t let you mine it and export it? You would throw it back in the ground.’ What is your
reaction to that?
Friday, 23 September 2005 REPS I&R 29
INDUSTRY AND RESOURCES
Mr Fewster—It is true. I have written to the former minister here in Western Australia
outlining the predicament we have found ourselves in with Mulga Rock. We have run the
numbers and we know that we cannot produce scandium without the sale of uranium. His reply
was: ‘Good project but we’re very sorry.’ My comment is that that is just utter nonsense. There
are three separate deposits, but parts of the main resource—a thing called ‘Ambassador’—are
almost certainly economic just on the amount of nickel and cobalt that would be recovered, but
that is only a very small part of the resource. It may eventuate that we decide to go ahead and
mine that component to recover nickel, cobalt, vanadium and scandium, for example, but in that
process we will recover uranium.
Our deposit is very similar to Olympic Dam in the sense that the uranium has to be extracted
from the process stream, because if it is left in it will contaminate all the other products. Clearly
Olympic Dam have to remove the uranium so that it does not contaminate the copper. We could
not produce nickel from our resource without first removing the uranium. If we leave it in there
it will contaminate the nickel concentrate. In order to recycle the process solution, we would
then have to precipitate the uranium out of the solution, so we would have uranium in a solid
form on the surface, in a drum, and the question is: what would we do with that? To suggest that
we then tip it back in the hole is just ludicrous.
My comment is that the government’s policy at present looks good on paper, but the reality is
that, if it were ever put to the test and a mine or a deposit was brought right up to feasibility
stage and a predevelopment stage and the government had to then justify its position that it was
going to prevent the development of a mining project that we clearly thought would have
enormous benefits to the state and the goldfields region in particular, I could not quite see how
the government could sustain what I think would be fairly significant public criticism for trying
to impose that policy. As I said, it looks quite good on paper but in reality, in this instance, I
think it is just nonsense.
CHAIR—Is it fair to say that the state government’s uranium mining ban is a restriction or a
severe restriction on your company?
Mr Fewster—I would think it is severe. If it were not for this ban, we would effectively be
two years into the project development phase and two years ahead of where we are now.
Certainly there has been a very significant change in the capital market’s position on uranium
mining and resources in Western Australia. Twelve months ago we could not raise any money at
all to evaluate a uranium resource in Western Australia.
CHAIR—I think the price has a bit to do with that.
Mr Fewster—It has. That is right, and I have to say that in the last four or five months we
have had no shortage of offers from people able to contribute. But, at the same time, there is the
evaluation that is placed on uranium resources in Western Australia, as in Queensland. There is
an amount. Yellowcake can be valued, and in fact the capital markets value anything and
everything. What I would call embargoed yellowcake in Australia, being uranium in either
Queensland or Western Australia, appears to be valued at about $2 a pound in the ground.
CHAIR—US dollars?
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Mr Fewster—No, that is Australian. Thereabouts. It has probably gone up a little bit lately,
but if you look at the value of companies that are listed on the Australian Stock Exchange that
hold significant uranium resources—the obvious example is Summit—their market
capitalisation works out at about $A2 a pound or thereabouts for yellowcake in their state of
resource. If you compare that to ERA, for example, Ranger appears to be capitalised, and ERA
or the yellowcake at Ranger appears to attract a market capitalisation of maybe $5 or $6 a pound
in situ. So we are effectively suffering a very severe discount compared to the rest of the market
in what the market is prepared to pay for our uranium resource.
But this time 12 months ago embargoed yellowcake was worth nothing to the capital markets.
They just were not interested. In fact, two years ago in our project the uranium was actually a
liability. We have had some dealings with the major US based aluminium company, and one of
the reasons they gave for being reluctant to proceed with a project was the difficulty in dealing
with the politics of uranium in Western Australia. So we are at a point now where we are
certainly able to raise capital, but there is a huge disparity between how much Australians are
prepared to pay and how much, for example, Canadians are prepared to pay.
This is another point I raised in my submission. Mulga Rock is virtually one of the last major
uranium resources—probably the last—in Australia which is looking for capital. We obviously
are unlisted. We cannot afford to continue funding this privately. We intend to raise capital in
quite large quantities in the near future. The best offers that we are receiving are coming from
offshore, and I think that is very much driven by the fact that, while there are a number of people
in Australia who are very keen to invest in uranium, they are still not prepared to pay as much as
those in the rest of the world are prepared to pay. Without wanting to sound xenophobic, I think
Australia should try to retain ownership of its uranium resources in some way. WMC was a good
case in point. We are quite comfortable with anyone owning just about anything in Australia
except resources that we see as having quite significant strategic importance, and uranium would
be at the top of the pile.
I can assure you that the Canadians have been moving through Australia like a vacuum cleaner
and acquiring virtually everything that has a uranium resource attached to it. There are probably
three or four Canadian companies operating in Australia. They have enormous market
capitalisations on the Canadian stock exchange and can acquire funds of any magnitude, at
almost a moment’s notice, to acquire whatever they want. As time progresses, I can see that
progressively more and more of Australia’s uranium resources will pass into foreign ownership,
and ours may well be one of them. Again, that is because of the impediments that come about
here in Western Australia because of the government’s policy and the way in which both state
and federal policies appear to generate a perception, certainly amongst Australian investors, that
they have to apply a significant discount to the value of uranium as opposed to what the rest of
the world will value it at. State government policy has held us up for two years.
Personally, I think Mulga Rock will be the first potential uranium resource to be developed in
Western Australia. It is virtually one of the top three, I think. The top three are Yeelirrie, Kintyre
and Mulga Rock, in terms of deposits that are of sufficient size to allow their development as a
stand-alone operation. I cannot see any of the other deposits developing until there is some
process developed in Western Australia for the transport and export of yellowcake, for example,
and that alone is going to be a fairly complicated process. On that matter, our proposal is that
yellowcake would come into Parkston at Kalgoorlie, and our intention would be to export it
Friday, 23 September 2005 REPS I&R 31
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through Port Adelaide. I do not think any Western Australian yellowcake would be exported
through a Western Australian port, simply because of the initial problem of getting access to the
port and also because of the problem of getting access to shipping that is prepared to take
yellowcake. It would seem to me to be a rather futile exercise to try and arrange for yellowcake
to be shipped out of Western Australia when there is a very well-established protocol for
shipping it out of both Adelaide and Darwin. In our case, it is just as easy to put a container of
yellowcake on a train at Parkston and send it to Adelaide as it is to put it on a train and send it to
Fremantle.
Mr HAASE—The public perception of what exactly is the current Western Australian
government’s policy in relation to restricting the shipping of uranium is a little confused at
present. I wonder if you could tell us what your perception of the current state of play is, in what
order you see the obstacles and what processes need to be engaged to knock some of them
down?
Mr Fewster—I think the most important first step for the uranium industry in Western
Australia is to educate the public and acquire public support. There was a Newspoll some weeks
ago in the West Australian—and I have to say that the results were very surprising to all of us in
the uranium industry—which found that 48 per cent of those surveyed supported uranium
mining in Western Australia and only 44 per cent opposed it. So it would appear that virtually
half the people support uranium mining in Western Australia at present. First and foremost, there
has to be a well-funded and well-organised campaign to inform the people of Western Australia
about what is actually involved in uranium mining and the fact that it is such a benign industry.
Mr HAASE—But what is your perception of the status of the bans imposed by the state?
There has been confusing talk about some deposits predating such and such a decision, and a
question as to whether or not they can be legally mined et cetera. There is a restriction on the
movement of product and the Western Australian government is able to control that movement in
Western Australia. For the record, could you give us your knowledge of the current status in
reality and take some of the cloud away from the public perception.
Mr Fewster—I guess in a word you would have to describe it as being a bit schizophrenic in
that Mulga Rock is probably the only one of the three major deposits which is still not covered
by mining leases. So, yes, the proposed government prohibition on uranium mining would only
be by amendment to the mining act, which would then apply a condition on the grant of mining
leases. I certainly cannot see any way in which the government can prohibit the mining of
uranium from an existing mining lease—or at least they cannot remove ownership of that
uranium from the owner of the mining lease. Effectively, if the government wanted to do that,
they would have to resume ownership of the uranium, and that would obviously bring about
issues of compensation and also sovereign risks. It is the case at the moment that, theoretically,
both Yeelirrie and Kintyre could be mined, or at least they could start a mine there, start mining
uranium, process it, recover it and put it in a drum.
Mr HAASE—Let us proceed from having put it in the drum.
Mr Fewster—When it is in the drum they then have to get it to a port somewhere. There is, I
believe, sufficient existing legislation to allow the government to prohibit the movement of the
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yellowcake off the lease. Certainly in terms of its movement on public roads, yellowcake is a
class 7 material and there are notifications that are required.
Mr HAASE—What is a class 7 material?
Mr Fewster—It is a hazardous material.
Mr HAASE—How hazardous?
Mr Fewster—Yellowcake is actually about the least hazardous of all commodities that you
can put on the back of a truck. By way of analogy, countless truck loads of sodium cyanide are
shipped to the goldfields each year. Each one of those truck loads of sodium cyanide would be
1,000 times more dangerous than a truck load of yellowcake.
CHAIR—But the perception is that yellowcake is more dangerous than sodium cyanide.
Mr Fewster—That is right. All it goes to show is that those who would oppose uranium
mining in Western Australia have succeeded in the public relations war up until now. Yellowcake
is almost entirely benign. It emits alpha radiation in very small quantities. Alpha radiation is
effectively helium gas. It is barely radioactive and it is not toxic. It is only dangerous if you
inhale it. If you get it in your lungs it is a problem. If you swallow it, it does not really matter—it
just finds its way back out again. The industry would in general say that a tanker load of petrol is
a far more dangerous thing to be moving around on the roads of Western Australia than a
container load of yellowcake.
Going back to what the Western Australian government can do, I would think that they would
be able to prohibit the movement of yellowcake on public roads because it is a class 7 material.
There is a whole range of other issues that come into the transport of radioactive materials
anyway. I am not entirely familiar with the legislation. It has been put to me, though, that there
would be a case that, if the purpose of the movement of the yellowcake was to ship it, for
example, to South Australia, then that aspect of the federal Constitution—which, as I understand,
requires free trade between states—could be tested to see whether it would be allowable to move
yellowcake, particularly, for example, if it was transported on a private road.
The obvious example of a private road in Western Australia is the access road on the trans-
Australian railway line. As I understand it, the railway line is located on freehold property
owned by the federal government, or whoever it is that operates it now. Could we truck
yellowcake from Western Australia to South Australia on a private road or even just put it on the
train across to South Australia—again, if it was transported on private roads from site? That
would be a very interesting scenario to examine. If someone did develop a resource to the point
where they were at mine development, I would think that it would be very difficult for the state
government to then sustain their position that they should prohibit the development of that
resource.
Mr HAASE—Do you believe there is any appetite for any of the owners with mining leases
to bring Federal Court action against the state government?
Mr Fewster—No, unfortunately.
Friday, 23 September 2005 REPS I&R 33
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Mr HAASE—Given that there is no appetite in your opinion for that, what would you say to
the consideration that the action was not being taken with the intention of leaving the resource in
the ground for even higher prices post 2013—this is in the minds of industry as a strategy from
the shareholders of the industry?
Mr Fewster—I think the present prices are enough to get everyone interested in developing
resources. I would certainly think that Rio, for example, would be very keen to do something
with Kintyre but, given their vested interest in the iron ore industry, maybe they will not achieve
that. The companies who have the capacity are BHP, Rio or Paladin. They are the resources that
I see as potentially being developed. But Paladin’s resource at Manyingee is an in situ leach
operation and I would be very surprised if that would be the first deposit to be developed in
Western Australia, just because of the problems inherent with using the in situ leach technique.
Mr HAASE—Going back to the Mulga Rock situation, what would you identify as your
major hurdle at this point in time: the policy of the Western Australian government or your
inability to enter into a joint venture for the development of the scandium?
Mr Fewster—The policy of the state government. We need to go to mining leases. Mulga
Rock is a very complicated deposit, but beneath one of the uranium deposits we have a gold
deposit which we think we can recover using some known mining methods. Of course, before
we could even develop a gold deposit, we need a mining lease, but we will not accept a mining
lease that comes with a condition that we are never allowed to mine uranium, because we know
that the most valuable component of the resource in that particular case is uranium. We have a
problem in that just acquiring a mining lease is something that we would not entertain at the
moment, and that is particularly because of government policy.
Mr HAASE—Everyone knows the Western Australian government policy. What are you
finding in your day-to-day dealings with the mines department—I am not sure that it has not
been renamed in Western Australia—and the personnel that you need to deal with face-to-face in
seeking out these leases and rights to mine?
Mr Fewster—The mines department I have found are very sympathetic. There are some in
there who are not but, in general, they are very sympathetic to the predicament we all find
ourselves in, certainly in our instance. Their advice is that they are bound by policy and, of
course, are not allowed to operate outside the bounds of that policy. The mines department could
not, for example, grant us a mining lease that did not carry the ‘no uranium mining’ condition.
Mr HAASE—Of course, but generally you would say that those that are involved with and
are probably, in a practical way, most knowledgeable about the industry in Western Australia, as
individuals understanding the product, problems and environment that they exist in, are
sympathetic to your cause but political bureaucracy says that this is a hot potato and they are not
going to debate it.
Mr Fewster—Very much so, yes. As I said, the people in the mines department are
sympathetic. One issue, for example, is the movement of samples from a site. Clearly, Western
Australian policy does not prohibit us from conducting exploration of our deposit. In the process
of conducting exploration, we gather up samples. Those samples can carry grades of uranium,
which again bring them up into the class 7 category, so there are issues related to the transport—
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Mr HAASE—They are less dangerous than a can of petrol.
Mr Fewster—They are far less dangerous but fall within the auspices of a class 7 material.
We have no problems in dealing with the departments that would allow us to transport those
samples. They are fully aware of the fact that moving a truck load of uranium around Western
Australia is far safer than moving a truck load of smoke detectors, and there are plenty of truck
loads of smoke detectors being shunted around the country.
They are aware of the signs; they are aware of the facts. On that basis, that is how they
operate. Being aware of the facts, they realise that there is absolutely no health or safety or other
issues related to what we are trying to do. But, at the same time, they are bound by policy in that
they could not give us permission for a truck load of yellowcake.
CHAIR—For the Hansard record, explain why a truck load of smoke detectors is more
dangerous than a truck load of yellowcake.
Mr Fewster—The active product in the smoke detector is an isotope called americium-241.
Americium-241 was discovered during the Manhattan Project, which is why it is called
americium. Americium-241 is a decay product of plutonium-241. Plutonium-241 is a product
that is recovered from the reprocessing of high-level nuclear waste. Plutonium-241 can only be
produced in a nuclear reactor.
CHAIR—Do you think the public know that?
Mr Fewster—No, of course they do not. But, as I said, uranium is an alpha emitter but
uranium-238, which is the predominant isotope in nature, has a half-life of 4.8 billion years. The
amount of radiation that something emits is a function of its half-life.
Mr HAASE—If I can interrupt you: that is a very scary statement in the hands of those who
have little information. What does half-life mean, and how dangerous is it to start with?
Mr Fewster—Half-life is the amount of time it takes for half of an isotope to decay down to
the next product, effectively. All elements that emit radiation transform themselves from their
primary product to an end product. So uranium decays to lead. There are two isotopes primarily
in nature: 238 and 235. Uranium-235 is the stuff that goes into nuclear power stations and atom
bombs. But 235 represents only 0.71 per cent of all uranium in nature, so effectively 99.3 per
cent of uranium in nature is 238. As I said, 238 has a half-life of 4.8 billion years. That means
that, every 4.8 billion years, half of the uranium that exists in nature turns into lead.
Mr HAASE—How dangerous is it when it starts out in that process?
Mr Fewster—Because its half-life is so long, it takes a long time for the material to emit the
particles. The first particle that uranium emits in its process of shrinking in size, effectively, is
what is called an alpha particle. An alpha particle consists of two protons and two neutrons—that
is, effectively, helium. So most of the helium that exists on earth today is actually a product of
the decay of uranium. Because uranium has such a huge half-life, the amount of alpha radiation
that it emits is very low, whereas I think americium-241 has a half-life in the order of 200 years.
Effectively we have elements that are starting off with about the same sort of atomic size:
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uranium-238 has 238 protons and neutrons; americium-241 has 241. Uranium-238 then takes 4.8
billion years to reduce in volume or mass by half by emitting radioactive particles, whereas
americium reduces its mass by half in 200 years. So it clearly emits a far greater amount of
radiation. Indeed, that is how they work.
Mr HAASE—And it is therefore more dangerous?
Mr Fewster—It would be if you were to inhale it. The only way alpha emissions are
dangerous is if they are inhaled and captured within your lungs. When the alpha particle is
emitted, it is ionising radiation. It is ionising because it does not contain any electrons. But, as
soon as that alpha particle acquires electrons—and it just strips them off, whatever it bumps
into—it then turns into helium gas. Typically, the sort of distance over which alpha particles are
ionising is in the order of a few millimetres. So if we could have, sitting on the desk in front of
us, a paperweight of a piece of plutonium—plutonium is an alpha emitter as well—or
americium, lead or uranium, as long as it was more than 10 centimetres away, we would all be
safe. The only problem comes if it is vaporised into some form that allows it to be inhaled. If it
then attaches to the lining of the lungs, it becomes dangerous.
Mr HAASE—What about the likelihood of it? You have already given the doubting
Thomases the ammunition. You say, ‘If it vaporises.’ What sort of special circumstances would
be required to vaporise that piece of plutonium?
Mr Fewster—If you attach some very high explosives to it, as the English did at Maralinga,
that does a very good job.
Mr HAASE—But it is not going to do it of its own accord?
Mr Fewster—No, it cannot do it of its own accord. Indeed, if it is encapsulated within a small
piece of plastic, as a smoke detector is, it is entirely safe and it remains safe forever.
CHAIR—Thank you for your evidence. If we require any further information, the committee
secretariat will contact you.
Mr Fewster—Thank you.

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