Looking at Uranium
The uranium sector was hit hard in the aftermath of the 2008 Financial Crisis, then came another crisis in 2011, when a massive earthquake damaged nuclear facilities in Japan. That caused another big plunge in demand for uranium for the past few years. More recently, it appears that investors have lost interest in uranium investments as part of a general and significant sell-off in the energy sector. The nearly 50% plunge in the price of oil in 2014, has had some contagion effects on other stocks in the energy sector, including uranium. However, it is a mistake for the market to sell the uranium sector just because oil is cheap now. Nuclear power generates electricity, and oil is used not just for electricity but also as a fuel for transportation. Because of this, uranium and oil don’t truly compete for the same markets.
In the last 60 years, uranium has become one of the world’s most important energy minerals. The current global demand for uranium is about 67,000 tU/yr (tonnes uranium per year). The vast majority is consumed by the power sector with a small amount also being used for medical and research purposes, and some for naval propulsion. At present, about 42% of uranium comes from conventional mines (open pit and underground) about 51% from in situ leach, and 7% is recovered as a by-product from other mineral extraction.
Supply:
Uranium mines operate in some 20 countries, though in 2014 some 54% of world production came from just ten mines in six countries (see Table 1).
Table 2 shows the current known recoverable resources of uranium by country. Uranium is not a rare element and occurs in potentially recoverable concentrations in many types of geological settings. As with other minerals, investment in geological exploration generally results in increased known resources. Over 2005 and 2006 exploration effort resulted in the world’s known uranium resources increasing by 15% in that two years.
Thus based on current demand alone, the world’s measured recoverable resources for uranium works up to about 90 years of ‘fuel’.
Two thirds of the world’s production of uranium comes from mines in Kazakhstan, Canada and Australia. Kazakhstan produces the largest share of uranium from mines (41% of world supply from mines in 2013), followed by Canada (16%) and Australia (9%).
Below is a look at the top uranium producing countries since 2007.
Looking further into the top 10 uranium producing countries:
- Kazakhstan – Mine production: 23,127 tonnes
Kazakhstan has been the world’s leading producer of uranium since 2009, when it produced almost 28 percent of the global total. In 2014, the country produced 23,127 tonnes, an increase from 2013’s 22,451 tonnes. Kazakhstan has expressed its intent to ramp up production efforts through 2018, with 17 mines currently in production.
All of the uranium exploration and mining in the country is controlled by state-owned Kazatomprom — that includes all import and export activity. The company has strategic alliances with Russia, Japan and China, and holds an interest in international nuclear company Westinghouse Electric Company.
- Canada – Mine production: 9,134 tonnes
Canada produced 9,134 tonnes of uranium in 2014, a dip from the 9,331 tonnes it produced in 2013. However, the country’s uranium output is expected to significantly increase in 2015 when the Cigar Lake mine comes into full operation. The mine, which is 50-percent owned by Cameco (TSX:CCO,NYSE:CCJ), has proven plus probable reserves of 234.9 million pounds U3O8.
- Australia – Mine production: 5,001 tonnes
Australia’s uranium production has dropped for the past two years, reaching 5,001 tonnes in 2014. This significant fall came after the country produced 6,350 tonnes in 2013 and 6,991 tonnes in 2012. In 2013, the country’s Honeymoon mine was shut down pending a better uranium price. The main Beverley (and North Beverley) wellfields were shut down shortly after Honeymoon.
While Australia holds the largest uranium resource of any country and according to Mining Weekly has the potential to earn AU$2 billion annually, mining bans and restrictions in various states prevent much mining from happening there.
- Niger – Mine production: 4,057 tonnes
Niger produced 4,057 tonnes of uranium in 2014, a large decrease from 2013’s 4,518 tonnes. The country has two significant uranium mines in production, yet there is strong government backing for expanding mining operations; that has led to plans for additional mines and prospects in the future.
Of these new mines, GoviEx Uranium’s (CSE:GXU) Madaouela project will be a promising addition once it begins production; that is expected to happen in 2017 or 2018. The project’s measured and indicated mineral resource was recently increased to 110.76 million pounds U3O8, while its inferred resource sits at 27.66 million pounds U3O8.
- Namibia – Mine production: 3,255 tonnes
Namibia’s uranium production also saw a severe drop in 2014, sinking to 3,255 tonnes from 4,323 tonnes the previous year. The country has two uranium mines that are capable of producing 10 percent of the world’s output.
Considering the country receives half its power from South Africa, which has power constraints of its own, it faces serious electricity challenges. Luckily the government, which is a proponent of expanding mine production, has expressed an interest in supplying its own electricity through new nuclear power resources; as yet no progress has been made towards this goal.
- Russia – Mine production: 2,990 tonnes
Russia produced 2,990 tonnes of uranium in 2014, while its 2013 output was 3,135 tonnes. The country is expected to increase its production in the coming years, and is focused on generating additional revenue from exports. This goal is motivated politically as well as economically.
Should sanctions against Russia be gradually lifted it will likely alleviate some of its production woes; however, Rosatom State Atomic Energy, the country’s nuclear power company, said it aims to be one of the top global players in the sector despite sanctions from the west. For now, Rosatom feels no direct impact from sanctions.
7. Uzbekistan
Mine production: 2,400 tonnes
In 2014, Uzbekistan produced 2,400 tonnes of uranium, fairly even compared to the last few years. Most of the country’s uranium mining occurs in the Navoi region, with the mines being linked by railway.
Navoi Mining & Metallurgy Combinat (NMMC) is part of state holding company Kyzylkumredmetzoloto, and handles all the country’s uranium-mining activity. In April 2015, NMMC announced the government had approved plans to implement 27 projects to modernize its production facilities by 2019.
8. United States
Mine production: 1,919 tonnes
The US was one of the few countries to increase its uranium production in 2014, and has actually been relatively consistent in its increases over the years. In 2014, the country produced 1,919 tonnes of uranium, a jump from 2013′s 1,792 tonnes.
Uanium mining in the US is currently only performed by a few companies, while exploration is handled by many. The White Mesa mine in Utah is fed by four or five underground mines and several in-situ leach operations, covering all US uranium production.
9. China
Mine production: 1,500 tonnes
China’s uranium production has remained constant over the past few years, totaling 1,500 tonnes in 2012, 2013 and 2014. The country is making plans to expand its production, with many state-owned enterprises acquiring uranium resources within China, as well as internationally.
Currently, domestic uranium mining supplies less than a quarter of China’s nuclear fuel needs, and the country aims to take steps to be self sufficient in most aspects of its fuel cycle. Currently, 26 nuclear reactors are being built on home soil.
10. Ukraine
Mine production: 926 tonnes
Ukraine also saw an increase in its uranium production from 2013 to 2014, though not very much. In 2014, the country produced 926 tonnes of uranium, slightly more than the 922 tonnes produced in 2013. Ukraine is largely dependent on nuclear energy, with 15 reactors generating approximately half of its electricity. To increase its fuel for nuclear power, the country is open to foreign investment to increase uranium production.
Supply from elsewhere:
As well as existing and likely new mines, nuclear fuel supply may be from secondary sources including:
- recycled uranium and plutonium from used fuel, as mixed oxide (MOX) fuel,
- re-enriched depleted uranium tails,
- ex-military weapons-grade uranium,
- civil stockpiles,
- ex-military weapons-grade plutonium, as MOX fuel.
Commercial reprocessing plants are operating in France and UK, and another is due to start up in Japan. The product from these re-enters the fuel cycle and is fabricated into fresh mixed oxide (MOX) fuel elements. About 200 tonnes of MOX is used each year, equivalent to less than 2000 tonnes of U3O8 from mines.
Military uranium for weapons is enriched to much higher levels than that for the civil fuel cycle. Weapons-grade is about 97% U-235, and this can be diluted about 25:1 with depleted uranium (or 30:1 with enriched depleted uranium) to reduce it to about 4%, suitable for use in a power reactor. From 1999 to 2013 the dilution of 30 tonnes per year of such material displaced about 9720 tonnes U3O8 per year of mine production.
Under the Megatons to Megawatts program that was successfully completed in December 2013, the USA and Russia have agreed to dispose of 34 tonnes each of military plutonium by 2014. Most of it is likely to be used as feed for MOX plants, to make about 1500 tonnes of MOX fuel which will progressively be burned in civil reactors.
Demand:
Today there are some 437 nuclear power reactors operating in 31 countries plus Taiwan (to differentiate with China), with a combined capacity of over 380 GWe. In 2014 these provided 2411 billion kWh, over 11% of the world’s electricity. They require some 78,000 tonnes of uranium oxide concentrate containing 67,000 tonnes of uranium (tU) from mines (or the equivalent from stockpiles or secondary sources) each year. This includes initial cores for new reactors coming on line. The capacity is growing slowly, and at the same time the reactors are being run more productively, with higher capacity factors, and reactor power levels. However, these factors increasing fuel demand are offset by a trend for increased efficiencies, so demand is dampened – over the 20 years from 1970 there was a 25% reduction in uranium demand per kWh output in Europe due to such improvements, which continue today.
Quoted “spot prices” apply only to marginal trading from day to day and in recent years have represented about one-quarter of supply. Most trades are via 3-15 year term contracts with producers selling directly to utilities. The contacted price in these contracts is, however, often related to the spot price at the time of delivery. However, as production has risen much faster than demand, fewer long-term contracts are being written
Price Chart of uranium:
Operational Reactors Worldwide:
| COUNTRY | NUCLEAR ELECTRICITY GENERATION 2014 | REACTORS OPERABLE | REACTORS UNDER CONSTRUCTION | REACTORS PLANNED | REACTORS PROPOSED | URANIUM REQUIRED 2015 | |||||
| Jun-15 | Jun-15 | Jun-15 | Jun-15 | ||||||||
| billion kWh | % e | No. | MWe net | No. | MWe gross | No. | MWe gross | No. | MWe gross | tonnes U | |
| Argentina | 5.3 | 4.0 | 3 | 1,627 | 1 | 27 | 2 | 1,950 | 2 | 1,300 | 215 |
| Armenia | 2.3 | 30.7 | 1 | 376 | – | – | 1 | 1,060 | 88 | ||
| Bangladesh | – | – | – | – | – | – | 2 | 2,400 | – | – | – |
| Belarus | – | – | – | – | 2 | 2,388 | – | – | 2 | 2,400 | – |
| Belgium | 32.1 | 47.5 | 7 | 5,943 | – | – | – | – | – | – | 1,017 |
| Brazil | 14.5 | 2.9 | 2 | 1,901 | 1 | 1,405 | – | – | 4 | 4,000 | 326 |
| Bulgaria | 15.0 | 31.8 | 2 | 1,906 | – | – | 1 | 950 | – | – | 324 |
| Canada | 98.6 | 16.8 | 19 | 13,553 | – | – | 2 | 1,500 | 3 | 3,800 | 1,784 |
| Chile | – | – | – | – | – | – | – | – | 4 | 4,400 | – |
| China | 123.8 | 2.4 | 26 | 23,144 | 24 | 26,313 | 44 | 51,050 | 136 | 153,000 | 8,161 |
| Czech Republic | 28.6 | 35.8 | 6 | 3,904 | – | – | 2 | 2,400 | 1 | 1,200 | 566 |
| Egypt | – | – | – | – | – | – | 2 | 2,400 | 2 | 2,400 | – |
| Finland | 22.6 | 34.6 | 4 | 2,741 | 1 | 1,700 | 1 | 1,200 | 1 | 1,500 | 751 |
| France | 418.0 | 76.9 | 58 | 63,130 | 1 | 1,720 | 1 | 1,720 | 1 | 1,100 | 9,230 |
| Germany | 91.8 | 15.8 | 9 | 12,003 | – | – | – | – | – | – | 1,889 |
| Hungary | 14.8 | 53.6 | 4 | 1,889 | – | – | 2 | 2,400 | – | – | 357 |
| India | 33.2 | 3.5 | 21 | 5,302 | 6 | 4,300 | 22 | 21,300 | 35 | 40,000 | 1,579 |
| Indonesia | – | – | – | – | – | – | 1 | 30 | 4 | 4,000 | – |
| Iran | 3.7 | 1.5 | 1 | 915 | – | – | 2 | 2,000 | 7 | 6,300 | 176 |
| Israel | – | – | – | – | – | – | – | – | 1 | 1,200 | – |
| Italy | – | – | – | – | – | – | – | – | – | – | – |
| Japan | – | – | 43 | 40,480 | 3 | 3,036 | 9 | 12,947 | 3 | 4,145 | 2,549 |
| Jordan | – | – | – | – | – | – | 2 | 2,000 | – | ||
| Kazakhstan | – | – | – | – | – | – | 2 | 600 | 2 | 600 | – |
| Korea DPR (North) | – | – | – | – | – | – | – | – | 1 | 950 | – |
| Korea RO (South) | 149.2 | 30.4 | 24 | 21,657 | 4 | 5,600 | 8 | 11,600 | – | – | 5,022 |
| Lithuania | – | – | – | – | – | – | 1 | 1,350 | – | – | – |
| Malaysia | – | – | – | – | – | – | – | – | 2 | 2,000 | – |
| Mexico | 9.3 | 5.6 | 2 | 1,600 | – | – | – | – | 2 | 2,000 | 270 |
| Netherlands | 3.9 | 4.0 | 1 | 485 | – | – | – | – | 1 | 1,000 | 103 |
| Pakistan | 4.6 | 4.3 | 3 | 725 | 2 | 680 | 2 | 2,300 | – | – | 101 |
| Poland | – | – | – | – | – | – | 6 | 6,000 | – | – | – |
| Romania | 10.8 | 18.5 | 2 | 1,310 | – | – | 2 | 1,440 | 1 | 655 | 179 |
| Russia | 169.1 | 18.6 | 34 | 25,264 | 9 | 7,968 | 31 | 33,264 | 18 | 16,000 | 4,206 |
| Saudi Arabia | – | – | – | – | – | – | – | – | 16 | 17,000 | – |
| Slovakia | 14.4 | 56.8 | 4 | 1,816 | 2 | 942 | – | – | 1 | 1,200 | 466 |
| Slovenia | 6.1 | 37.2 | 1 | 696 | – | – | – | – | 1 | 1,000 | 137 |
| South Africa | 14.8 | 6.2 | 2 | 1,830 | – | – | – | – | 8 | 9,600 | 305 |
| Spain | 54.9 | 20.4 | 7 | 7,002 | – | – | – | – | – | – | 1,274 |
| Sweden | 62.3 | 41.5 | 10 | 9,487 | – | – | – | – | – | – | 1,516 |
| Switzerland | 26.5 | 37.9 | 5 | 3,333 | – | – | – | – | 3 | 4,000 | 521 |
| Thailand | – | – | – | – | – | – | – | – | 5 | 5,000 | – |
| Turkey | – | – | – | – | – | – | 4 | 4,800 | 4 | 4,500 | – |
| Ukraine | 83.1 | 49.4 | 15 | 13,107 | – | – | 2 | 1,900 | 11 | 12,000 | 2,366 |
| UAE | – | – | – | – | 3 | 4,200 | 1 | 1,400 | 10 | 14,400 | – |
| United Kingdom | 57.9 | 17.2 | 16 | 9,373 | – | – | 4 | 6,680 | 7 | 8,920 | 1,738 |
| USA | 798.6 | 19.5 | 99 | 98,792 | 5 | 6,018 | 5 | 6,063 | 17 | 26,000 | 18,692 |
| Vietnam | – | – | – | – | – | – | 4 | 4,800 | 6 | 6,700 | – |
| WORLD** | 2,411 | c 11.5 | 437 | 380,250 | 66 | 68,997 | 168 | 189,504 | 322 | 364,270 | 66,883 |
Over 60 power reactors are currently being constructed in 13 countries plus Taiwan, notably China, India, South Korea and Russia. Most reactors currently planned are in the Asian region, with fast-growing economies and rapidly-rising electricity demand. Many countries with existing nuclear power programs (Argentina, Armenia, Brazil, Bulgaria, China, Czech Rep., India, Pakistan, Romania, Russia, Slovakia, South Korea, South Africa, UAE, Ukraine, UK, USA) have plans to build new power reactors (beyond those now under construction).
In all, over 160 power reactors with a total net capacity of some 186,000 MWe are planned and over 300 more are proposed. Energy security concerns and greenhouse constraints on coal have combined with basic economics to put nuclear power back on the agenda for projected new capacity in many countries.
In the USA there are plans for five new reactors, beyond the five under construction now. It is expected that some of the new reactors will be on line by 2020.
In Finland, construction is now under way on a fifth, very large reactor which is expected to come on line in 2017, and plans are firming for another large one to follow it.
France is building a similar 1600 MWe unit at Flamanville, for operation from 2016, and a second may follow it at Penly.
In the UK, four similar 1600 MWe units are planned, and a further 6000 MWe is proposed.
Romania‘s second power reactor istarted up in 2007, and plans are being implemented for two further Canadian units to be built.
Slovakia is completing two 470 MWe units at Mochovce, to operate from 2017.
Bulgaria is planning to build a large new reactor at Kozloduy.
In Russia, six reactors and two small ones are under active construction, one large one being a large fast neutron reactor. About 30 further reactors are then planned, some to to replace existing plants. This will increase the country’s present nuclear power capacity by 50% by 2030. In addition about 5 GW of nuclear thermal capacity is planned. A small floating power plant is expected to be completed by 2016 and others are planned to follow.
Poland is planning two 3000 MWe nuclear power plants.
South Korea plans to bring a further further four reactors into operation by 2018, and another eight by about 2030, giving total new capacity of 17,200 MWe. All of these are the Advanced PWRs of 1400 MWe. These APR-1400 designs have evolved from a US design which has US NRC design certification, and four been sold to the UAE (see below).
Japan has two reactors under construction but another three which were likely to start building by mid-2011 have been deferred until further notice.
In China, now with 26 operating reactors on the mainland, the country is well into the next phase of its nuclear power program. Some 24 reactors are under construction, including the world’s first Westinghouse AP1000 units, and a demonstration high-temperature gas-cooled reactor plant. Many more units are planned, including two largely indigenous designs – the Hualong One and CAP1400. China aims to more than double its nuclear capacity by 2020.
India has 21 reactors in operation, and six under construction. This includes two large Russian reactors (Rosatom is building two 1,000 MW nuclear power plants at Kudankulam in Tamil Nadu) and a large prototype fast breeder reactor as part of its strategy to develop a fuel cycle which can utilise thorium. Over 20 further units are planned. 18 further units are planned, and proposals for more – including western and Russian designs – are taking shape following the lifting of trade restrictions.
Pakistan has third and fourth 300 MWe reactors under construction at Chashma, financed by China. Two larger Chinese power reactors are planned.
In Kazakhstan, a joint venture with Russia’s Atomstroyexport envisages development and marketing of innovative small and medium-sized reactors, starting with a 300 MWe Russian design as baseline for Kazakh units.
In Iran a 1000 MWe PWR at Bushehr came on line in 2011, and further units are planned.
The United Arab Emirates awarded a $20.4 billion contract to a South Korean consortium to build four 1400 MWe reactors by 2020. The first three are under construction.
Jordan has committed plans for its first reactor, and is developing its legal and regulatory infrastructure.
Turkey has contracts signed for four 1200 MWe Russian nuclear reactors at one site and four European ones at another. Its legal and regulatory infrastructure is well-developed.
Vietnam has committed plans for its first reactors at two sites (2×2000 MWe), and is developing its legal and regulatory infrastructure. The first plant will be a turnkey project built by Atomstroyexport. The second will be Japanese.
Commentary:
It would appear that between the supply of uranium and the annual demand of uranium there is a supply gap/shortfall. Mines in 2013 supplied 59,370 tU, about 91% of utilities’ annual requirements. The balance is made up from secondary sources including stockpiled uranium held by utilities, and in the last few years of low prices those civil stockpiles have been built up again following their depletion about 1990-2005. At the end of 2013 they were estimated at more than 90,000 tU in Europe and USA, and a bit less in east Asia, mostly in China.
The perception of imminent scarcity drove the “spot price” for uncontracted sales to over US$ 100 per pound U3O8 in 2007 but it has settled back to $34-45 over the two years to the end of 2014. Most uranium however is supplied under long-term contracts and the prices in new contracts have, in the past, reflected a premium of at least $10/lb above the spot market. (Reference to Price chart of uranium above.)
Because of the cost structure of nuclear power generation, with high capital and low fuel costs, the demand for uranium fuel is much more predictable than with probably any other mineral commodity. Once reactors are built, it is very cost-effective to keep them running at high capacity and for utilities to make any adjustments to load trends by cutting back on fossil fuel use. Demand forecasts for uranium thus depend largely on installed and operable capacity, regardless of economic fluctuations.
Looking ten years ahead, the market is expected to grow significantly. The WNA 2013 Global Nuclear Fuel Market Report reference scenario (post Fukushima accident) shows a 31% increase in uranium demand over 2013-23 (for a 36% increase in reactor capacity – many new cores will be required). Demand thereafter will depend on new plant being built and the rate at which older plant is retired – the reference scenario has a 25.6% increase in uranium demand for the decade 2020 to 2030. Licensing of plant lifetime extensions and the economic attractiveness of continued operation of older reactors are critical factors in the medium-term uranium market. However, with electricity demand by 2030 expected (by the OECD’s International Energy Agency, 2008) to double from that of 2004, there is plenty of scope for growth in nuclear capacity in a world concerned with limiting carbon emissions.
Looking ahead
With the price of uranium so dependent on current nuclear reactor demands, it is small wonder that it had been greatly affected by the total shutdown of the 43 nuclear reactors of Japan since 2011. This 43 reactors represent a total of about 12.70% of the total power generated
worldwide by all the nuclear reactors.
So we have to look into the time line of when Japan will restart they nuclear power plants. In March 2014 the NRA (Nuclear Regulation Authority) said it would prioritise clearance of Kyushu’s Sendai 1 and 2 for restart, and in May it said this would be followed by Kansai’s Takahama 3 and 4. NRA has approved the review reports for these four units, which thus meet safety requirements for restart subject to final changes. Meanwhile a district court has ordered Kansai not to restart its Ohi 3 and 4 in Fukui prefecture due to public concerns. Kansai, with local government support, has appealed the ruling. (See table below).
Thus based on what we know for now, the Sendai 1 and 2 nuclear plants in Kyushu has restarted. The Kansai region Takahama 3 and 4, as well as, Ohi 3 and 4 is able restart to this year pending the lifting of the court injunction. In 2016, the Chunbu region Hamaoka 4 will restart. In 2017, Tohoku region (Onagawa 2 and Higashidori 1) and the Chunbu region (Hamaoka 3) are slated to come online.
New Power Plants
Exact figures for the construction of nuclear power plants are often commercially sensitive and hard to provide. However, a typical cost for construction of a Generation III reactor between 1400 – 1800 MW in OECD countries might be in the region of USD 5 – 6 billion. In non-OECD countries such as China, the cost of reactors is lower. Generally reactors which are first-of-a-kind are more expensive to build than those which are built in a series with previous experience of construction.
As nuclear power plants are complex construction projects, their construction periods are longer than other large power plants. It is typically expected to take 5 to 7 years to build a large nuclear unit (not including the time required for planning and licensing). Currently in countries such as South Korea and China, typical construction times range from 4 to 6 years, and in European countries construction may take between 6 and 8 years. In comparison, large coal plants can be built in about 4 years, while the construction time for natural gas fired plants is around 3 years.
With more than 60 new power plants now currently in construction I would just be taking a look at those that will be coming on line by 2018 excluding those by Japan as they have been deferred. These are what is known so far for commercial operations that is already connected to the grid.
2015:
Brazil (1 unit): Angra 3
China (8 units): Hongyanhe 4, Fuqing 2 & 3, Yangjiang 3, Haiyang 1, Fangchenggang 1, Changjian 1 & 2
S.Korea (1 unit): Shin Kori 3
USA (1 unit): Watts Bar 2
Total: 11 Units
2016:
China (5 units): Ningde 4, Haiyang 2, Taishan 1, Fangchenggang 2, Tianwan 3
S.Korea (1 unit): Shin Kori 4
Pakistan (1 unit): Chashma 3
Russia (2 units):Novovoronezh II-1, Leningrad II-1
Slovakia (1 unit): Mochovce 3
Total: 10 Units
2017:
China (11 units): Yanjiang 4, Sanmen 1 & 2, Taishan 2, Shandong Shidaowan, Fuqing 4, Tianwan 4, Putian 1 & 2, Zhangzhou 1 & 2
France (1 unit): Flamanville 3
S.Korea (1 unit): Shin Hanul 1
Pakistan (1 unit): Chashma 4
Russia (2 unit): Rostov 4, Dimitrovgrad
Slovakia (1 unit): Mochovce 4
U.A.E (1 unit): Barakah 1
Total: 18 Units
2018:
Argentina (1 unit): Carem-25
Finland (1 unit): Olkiluoto 3
S.Korea (1 unit): Shin Hanul 2
Russia (3 units): Floating NPP 1, Novovoronezh II-2, Leningrad II-2
U.A.E (1 unit): Barakah 2
Total: 7 units
Thus the demand for additional uranium would work out to roughly about 9,500 tU/yr when all the power plants come on line by 2018.
The graph, from CRU Strategies, shows a cost curve for world uranium producers in 2010, and suggests that for 53,500 tU/yr production from mines in that year, US$40/lb (current price around US$ 36/lb) is a marginal price. The cost curve may rise steeply at higher uranium requirements in 2012 (with production of 58,344 tU, 68,805 t U3O8).
With the main growth in uranium demand being in Russia and China, it is noteworthy that the vertically-integrated sovereign nuclear industries in these countries (and potentially India) have sought equity in uranium mines abroad, bypassing the market to some extent. Strategic investment in uranium production, even if it is not lowest-cost, has become the priority while world prices have been generally low. Russia’s ARMZ has bought Canada-based Uranium One, with 2013 production of over 5,000 tU in several countries, and China’s CGNPC-URC has bought a majority share of the large Husab project in Namibia, with potential production of 5,770 tU/yr (some to be sold into world markets). China’s SinoU (CNNC) has bought a 25% share in Langer Heinrich in Namibia, giving it over 500 tU/yr. It also has 37.5% of the SOMINA joint venture in Niger, entitling it to over 1,800 tU/yr in future, and up to 49% of Zhalpak JV in Kazakhstan, adding another 500 tU/yr.
The following graph suggests how these various sources of projected supply and demand might look In the decade ahead.
Conclusion
The biggest risks in uranium isn’t so much about the demand and supply currently; it would be actually technological improvements in the energy market that can disrupt the current set of energy providers in play. However, new disruptive technological breakthroughs are a threat to almost every modern industry. Unlike other industries, we have the advantage to know with certainty that uranium will experience at least 15 more years of impressive rising demand before any technological advancement is able to make it a truly abundant resource.
Therefore the key consideration in investing in the uranium market is that historically, it has been a thinly traded environment with fewer participants than other commodity markets. As such, a less liquid private marketplace, the uranium spot market can be influenced by one or a small group of participants; namely countries and miners with access to the raw material itself.
Disclaimer:
This is my very first contribution to this site. Be kind!
It is a privilege to be able to contribute to this site having been a frequent follower for a couple of years and i thank Tradehaven for allowing me to do so.
Also i have tried to be as accurate as possible and given that this sector is very poorly researched and covered here in Singapore due to the various reasons that we are too ‘small’ to have our own nuclear plants. Whatever mistakes there are, are all of my own making and i cannot truly vouch for the veracity of the article. It is just an attempt to cover something that is less common and more interesting to me than the standard real estate, finance sort of thing. Being the typical Singaporean that i am, i have almost absolutely no knowledge of this sector, whatever that is written here is sourced from the net. If anyone do know more, regarding this sector and spots any mistakes, do comment. It would be great to be able to learn more about something that we don’t normally know.