Climate-change concerns are resulting in investment in fuels that don’t produce greenhouse gases. Although solar and wind power garner a lot of attention, nuclear power from uranium is also a possibility. China is investing in nuclear power, and even countries such as Sweden that previously banned nuclear power are also building reactors. The world has limited uranium ores, which has prompted Sparton Resources of Toronto to look for alternatives. Coal contains small concentrations of uranium, and the ash that’s left when coal is burned in a coal-fired power station contains uranium at a higher concentration. Sparton has developed technology for extracting uranium from coal ash, with initial implementation at Lincang in Yunnan Province in China.

The coal used in Lincang has an exceptionally high uranium concentration, making it more economical to extract uranium from the ash than in most other parts of the world. However, the concentration is also very variable, ranging from 20 to 315 parts per million. The average concentration in the ash is 0.46 pounds of uranium oxide per tonne.

Suppose the data file (ch13_MCSP_Sparton_Resources) gives concentrations of uranium oxide in the coal ash from random samples taken in eight different locations. In order to be economic, on the basis of long-term contract prices of uranium oxide, Sparton requires an average concentration of at least 0.32 pounds per tonne. Suppose Sparton can fund two extraction plants. Use hypothesis testing to recommend which locations it should choose. Which third location should management investigate, even though the hypothesis test isn’t significant? Give a reason for your choice.