2012-12-17 by Richard Weitz
The limitations on domestic sources drive the PRC into a broader global acquisition system. And their quest to procure global uranium is significant for several reasons.
First, it provides insight into the development of China’s energy resources, as securing uranium is symptomatic of its decision to invest heavily in nuclear power.
Second, the price and availability of uranium will increasingly be affected as China begins to seek it in ever-larger quantities.
Third, since it will affect many other countries, it is important to understand the nature of the investment in order to have some idea of how those other countries might respond.
The Chinese approach to securing uranium has three prongs: broad domestic exploration, development of alternative nuclear power methods that use less uranium, and securing foreign uranium through long-term contracts.
Domestic Sources
Domestic sources currently supply about half of China’s annual uranium demand of around 1,800 tons. PRC officials want to raise internal production more and to reduce the PRC’s reliance on uranium imports, whose availability and prices are subject to international market forces largely beyond Beijing’s control.
But China has poor domestic uranium sources.
They account for at most 1% of the world’s known recoverable uranium resources, about 68,000 tons of uranium. The deposits are spread unevenly and are of small to medium size. The uranium itself is of low to medium grade (0.05-0.3% accounting for the majority of resources), with less than one fifth of deposits being high-grade. The PRC’s uranium output in 2008 was only 769 tons, or 1.8% of global production for that year.
Many large deposits contain only low-grade uranium, which is difficult and costly to extract, making its use for fueling nuclear power plants unsuitable. In China, 59 uranium types have been discovered in 200 different deposits, but only a few kinds of the mineral are suitable for nuclear power plants, with uraninite (UO2) being the most useful.
Uraninite is found primarily in deposits in the Hunan, Jiangxi, Guangdong, and Guangxi provinces, but these are small to medium in size with medium to low grades of the mineral. The quality of uranium also explains why certain countries might possess most uranium deposits, but are not necessarily the largest producers of the mineral.
The PRC’s civilian nuclear energy program began in the 1980s with the creation of the Ministry of Nuclear Industry (MNI). The MNI focused on applying China’s military technology, derived from its atomic bomb project, for civilian use. China first began using uranium for electricity generation in 1991, when it constructed its first nuclear power plant, the Quinshan. The Quinshan I station started operating in 1995.
Since then, the PRC has constructed a total of 14 nuclear reactors and plans to construct several dozen more in coming decades. By 2020, China plans to have more than 5% of its electricity supplied by nuclear power. To this end, PRC officials have devoted diplomatic energy as well as vast amounts of R&D to building its nuclear power industry.
To supply the fuel required for its nuclear reactors, the PRC has mined uranium from domestic sites in China since the late 1950s.
The first mine opened in the southeastern province of Hunan in 1960.
Domestic mines under the direction of the state-owned China National Nuclear Corporation and China Guangdong Nuclear Power Group have since been developed across the country. Some two dozen mines are currently in operation.
A number of mines have closed, but active geological research is underway for new deposits.
The PRC’s domestic uranium deposits are largely concentrated in the three regions of Southeast China, Northeast China-Inner Mongolia, and Northwest China.
The China Mining Association groups the country’s uranium deposits into three mineral “provinces”
The East province which begins in southern Guangdong Province and extends to northeastern Heilongjiang Province as part of the global marginal-Pacific uranium province.
The Tianshan-Qilianshan province which starts in western Xinjiang Uygur Autonomous Region and extends eastward to the Qilian area as part of the global Ural-Tianshan-Mongolia uranium metallogenic province
The West Yunnan province which is on the Himalayan fold belt.
The largest domestic sources of China’s uranium is located in Jiangxi, Guangdong, Hunan, Guangxi, Xinjiang, Liaoning, Yunnan, Hebei, Inner Mongolia, Zhejiang and Gansu, though another 12 provinces have small uranium deposits.
As Southeast China has historically been the location of uranium mines, the latter two locations have been seen as the areas that possess the greatest future potential. As such, exploration has been concentrated in these regions.
Recently, China Guangdong Nuclear Power Group announced the development of two large mines in south China and northwest China, and projects have begun in Inner Mongolia as well.
Historically, China has also relied on Tibetan uranium, capitalizing on more than 200 deposits that were found prior to 2000.
Uranium mining interests have thus far trumped labor and environmental concerns. In Tibet and elsewhere, local groups denounce the environmental degradation that invariably follows Chinese uranium mining, which results in accidental spills, irresponsible radioactive waste management, and deforestation that has devastated the landscape. Working conditions are widely considered unsafe.
China’s defenders claim that nuclear power is more environmental friendly than coal burning, still the dominant form of energy production in China.
Chinese Organizations in Charge of Uranium
The government controls nuclear power and uranium businesses in China through the use of state-owned corporations. These companies report to the State Council, the main governing body of the PRC.
The two biggest corporations are the China National Nuclear Corporation (CNNC) and the China Guangdong Nuclear Power Holding Company (CGNPC). Both corporations undertake research, conduct geological surveys, build uranium mines, negotiate contracts to import uranium, and construct nuclear reactors, power stations, and fuel-processing storages.
These two have numerous subsidiary companies and their structure is confusing; for instance, 45% of CGNPC is owned by the CNNC.
CNNC’s subsidiaries responsible for uranium importation and domestic exploration are the China Nuclear Energy Industry Corporation (trade only), and the China Uranium Corporation (SinoU, responsible for trade, domestic and international exploration and development).
CGNPC’s subsidiaries are CGNPC Uranium Resource Co., which is responsible for mining uranium domestically and abroad, and importation, and China Uranium Development Co., CGNPC’s investment company, which buys equity in foreign uranium exploration corporations.
China has historically relied primarily on traditional mining techniques to extract uranium from hard rock formations, but it began experimenting with less expensive in situ leach mining (ISL) in the 1990s.
In 1996, the PRC was responsible for 2.1% of the world’s ISL (in comparison to 35.2% in the United States and 25.5% in Kazakhstan), despite the fact that a quarter of China’s deposits are sandstone. This investment has allowed the PRC to expand increasingly into the extraction of uranium ore from sand stone deposits, which are lower grade but an economically viable option with ISL.
CNNC’s Bureau of Geology and the Beijing Research Institute of Uranium Geology are primarily responsible for the increase in exploration effort over the last decade and the ratcheting up of production in newer mines. According to the World Nuclear Association, the duo has focused on sandstone deposits amenable to In Situ Leach Mining (ISL) in Xinjiang and Inner Mongolia, where the Ordos Basin contains an estimated 30,000 tons of uranium in the Northeastern party of the country.
The China Nuclear Uranium Corporation—one of CNNC’s subsidiaries—plans to bring into production a new 200 tU/yr mine at Fuzhou while doubling producing at the Yining ISL mine to 300 tU/yr from 2006 production levels.
Through its subsidiaries, the CNNC is the only current supplier of uranium from domestic sources, but CGNPC subsidiary CGN-URC last year announced that it would develop two 500 tU/yr mines on deposits in Xinjiang, beginning in 2013.
Like Tibet, Xinjiang is an ethnically sensitive region of China, which could lead to new charges or Chinese uranium-mining genocide.