The government found uranium more than 30 years ago near Daejeon, but decided not to extract because it was too cheap. Now a small Australian company wants to develop a mine there. Local communities aren't happy to hear that.
By Kim Da-ye
Richard Henning, a geologist from Northern Ireland, helped discover the world’s third largest-deposit of uranium in Namibia.
At his former employer, Extract Resources, a small mining company in West Australia, he one day came up with the idea that there was half a chance that uranium was buried underneath a sandy area next to the Rossing Mine, one of the world’s largest uranium reserves located in southwestern Africa.
He and his boss decided to send out a geologist to drill the area. By early 2008, it turned out that below the 20 meters of sand was a massive amount of uranium ore, compared to which the deposit in the Rossing Mine is “only secondary,” Henning said.
“Our optimism has been rewarded because we were actually hitting things and proving it.
“The Rossing Mine was owned by Rio Tinto, one of the largest mining companies in the world. They couldn’t believe that we as a little, tiny West Australian company would find something like that.”
The Husab mine was later bought by a subsidiary of China Guangdong Nuclear Power Company and Henning left the company. He is now in Korea, hoping to replicate his success story here.
Henning, now the managing director of Stonehenge Metals, is setting his sight on uranium and vanadium deposits near Daejeon, which the company says could supply 25 percent of Korea’s nuclear fuel needs for 20 years.
Korea has four nuclear plants with a total of 21 reactors. A further five reactors are under construction and four more are being planned. Uranium consumption is expected to double from about 4,530 metric tons in 2011 to almost 9,000 tons in 2020. Stonehenge Metals says that 30,000 or more tons of uranium is buried in the Daejeon area.
Korea imports all the uranium used locally but the knowing about the existence of deposits is nothing new. The state-run Korea Resources Corp. discovered the energy source back in the late 1970s and early ‘80s, but did not extract it because of the low quality of the deposits and the low price of uranium back then.
Daejeon is not, however, Namibia or Australia where mines tend to be far from residential areas. The black shale with the uranium deposit is only 20 kilometers away from Korea’s fifth-largest city by population.
Down the hill from the site are farming villages well known for ginseng and sesame leaves, a popular salad item in Korea. While the local communities are worried about the possibility of uranium mines contaminating the region’s drinking water, farmers fear excavation could hurt the reputation of their crops.
One Korean company tried developing uranium and vanadium mines in the area in 2009 but the municipal government refused to issue a mining license because of fierce opposition from the local communities.
The bio-medical company, Tosai Holdings, tried to branch out into the energy sector but was eventually kicked off the KOSDAQ. Last year, the firm took the government of South Chungcheong Province to the court, asking it to cancel its disapproval of the uranium project.
Having arrived in Korea three years ago, Stonehenge Metals is still at the very early stage on the road to actual development. It has bought mining rights from Yellow Sun, a Korean-Australian joint venture, and has been test-drilling the areas after obtaining separate permits from landowners to enter them. The company hasn’t applied to the municipal government for mining licenses, the process expected to be the biggest obstacle.
Despite all odds, Stonehenge Metals, a tiny Australian Stock Exchange-listed company with a market cap of 12 million Australian dollars ($12.35 million) is betting nearly everything on the Daejeon venture.
In an exclusive interview, Business Focus spoke with Henning in central Seoul last week about where his optimism for the project comes from. Here is an edited excerpt of the conversation.
Considering the obstacles, why do you remain so optimistic about the project?
I guess my optimism comes from my part in the success story in which I saw from a very little beginning something can grow.
Too many uranium projects abroad are for shareholders’ enjoyment. This project is a real opportunity to produce something and the customer is right here. It’s a no brainer. It has to work because it has everything, economically and geologically. My frustration is not everyone shares my view.
If it doesn’t work out, for example, the municipal government ends up not giving a license, what is your plan?
The government hasn’t said “no” yet. I am hoping that if we do everything right, we won’t get to that position. If it doesn’t happen, we will find something else in Korea.
Will uranium produced here be domestically consumed?
Uranium ores first need to be sent to Japan where they will be enriched enough for nuclear power generation and then brought back to Korea. Korea cannot do this process under the international nuclear regulations.
Whether or not all uranium extracted here will be domestically consumed depends very much on negotiations with Korean users. If they do not need all of it and there is a surplus, we will negotiate with whoever wants it.
What has been the biggest challenge so far?
We’ve been here for two years. Progress has been slower than I would have liked. We are working through a few levels of bureaucracy in terms of getting permission.
If we do get more support from the central government, we may be able to deal with environmental issues and local communities better. In the meantime, the government says it would support us if we take care of environmental issues and local communities.
Let’s say you get to develop the mines for 20 years and leave. What’s left with the local community then?
We will have rehabilitated the mines by the time we leave. Water should be as pure as it was before. Plants in the area will grow much easier.
For rehabilitation, there is a bond. You have to keep some money, as much as $20 million to $30 million, set aside. You cannot get it back until the area is properly rehabilitated and this is part of the mining license.
The local communities will continuously benefit for 20 years. We will buy chemicals and trucks locally and use local schools and hospitals.
In Gangwon Province, to revive the economy of the region with abandoned mines, the government built a casino. Will Stonehenge Metals be willing to contribute to the region’s economy in the post-extraction era?
We can’t do that until we have revenues. We have to develop the mines first.