808s On-Line reports in 2020 that BHP’s Olympic Dam mine had a drop in uranium production in the first quarter of 2020. The news broke as the global COVID-19 pandemic was starting to heat up…but the author was skeptical when others tried to link the shortfall to the virus. In this post, the author will share his data and methodology in how the author approached this mystery. Yes, it should give you an idea of what’s out there in terms of public data. Once Kazatomprom begins to publicize post-COVID uranium production numbers, for instance, the author will look to do a similar analysis.
The Mine
Olympic Dam is an underground mine of truly staggering size located north of Adelaide in South Australia. The main business of the mine is copper, but the deposit has valuable quantities of uranium, silver, and gold alongside the copper. While Cameco’s McArthur River is on care and maintenance, Olympic Dam is the largest uranium mine in the world despite not being a uranium mine.
Production Drops in First Quarter of 2020
BHP reported total uranium production of 776 tonnes of uranium (tU) in First Quarter of 2020. For direct comparison, production in 4Q19 was 949 tU and production in 1Q19 was 1,106 tU. On the surface, this looks like an eye-popping decrease, but because Olympic Dam had (at the time and in hindsight) avoided a COVID-19 outbreak, The author was suspicious that the two were unrelated.
BHP is a publicly traded company, so they post an unbelievable amount of data for their shareholders on their corporate website in the financial results and operational reviews section. Specifically, you are looking for the production statistics within the annual operational review reports. It wasn’t displayed in the most convenient way, but by combining data from many quarterly and annual reports, I was able to collate all uranium production and stick it in an Excel spreadsheet. For the nine months ending in March 2020, the uranium data is at the bottom of page 19 of this report.
Data Analysis
The first thing I did, of course, was to convert tons of uranium to pounds of uranium. I am an American, after all, and we buy uranium in pounds. However, this is not as simple as it seems: while there are roughly 2.2 pounds in a kilogram (so 2,200 pounds in a metric ton), a “tU” is actually measuring only the uranium metal content in the U3O8 oxide. Consequently, you must “add” oxygen weight when going from tU to pounds U3O8, so the conversion factor is actually 2,600 pounds of U3O8 per tU.
[Ed. note: this number should look familiar because it is similar to the 2.613 used to convert pounds of U3O8 in kilograms of uranium (kgU) contained in UF6. The extra 0.013 in that factor is a 0.5% “loss factor” in the conversion process.] Anyway, TradeTech provides a handy table for these conversions on their website.
See News Release: April 21: https://www.bhp.com/-/media/documents/media/reports-and-presentations/2020/200421_bhpoperationalreviewfortheninemonthsended31march2020.pdf?la=en
Much more information. Read on.
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