Uranium Could Reach $80/lb This Year

Published on Sunday May 29 2011 (AEST)

The uranium spot price could reach $80/lb by the end of the year, beating levels before the Japanese nuclear disaster, NYSE-listed Uranium Energy Corp (UEC) CEO Amir Adnani told Mining Weekly Online on Friday.

“You may see $80/lb late this year or early next year, I think it’s within the next year at the most,” he said.

The price of the nuclear fuel plummeted by about 15% after the Japanese Tsunami caused radioactive leaks at the Fukushima-Daiichi plant, but it has now stabilised at around $57,50, according to US-based Ux Consulting.

The uranium spot price reached a three-year high of $73/lb in February as Chinese utilities started entering the market in earnest to supply their rapidly expanding nuclear reactor fleet.

“I don’t have a crystal ball, but I think that there’s a supply deficit issue that should favour the price moving higher,” Adnani said.

In an earlier presentation, he showed how there could be a 45-million-pound deficit in uranium supply once the Russia-US agreement to convert nuclear warheads into fuel expires in 2013, with demand totaling 175-million pounds yearly.

UEC owns the Hobson uranium plant in Texas, which it bought from Canada’s Uranium One in 2009, and started producing the fuel from nearby orebodies at the start of the year.

Adnani said the company will produce at a rate of one-million pounds a year within the next twelve months, at a cost of around $18/lb.

PRODUCTION GROWTH

UEC will then ramp up production to around 1,5-million pounds a year in the next two-to-three years, through the addition of new orebodies to its Texas operations.

The company produces from relatively small, shallow uranium deposits using so-called in-situ recovery methods, which means it pumps a mixture of oxygen and water into the orebody through wells, dissolving the uranium, which is then pumped back up to the surface in a solution for processing.

The Hobson facility has capacity to produce three-million tons of uranium yearly, and Adnani said this level could be reached by about 2016.

Earlier this month, UEC closed the acquisition of a Paraguayan uranium property, and the company aims to report its first resource statement by the end of the year.

The deposit can also be mined using in-situ methods, said Adnani.

Uranium Energy wasn’t actively chasing further acquisitions, though assets were cheaper as a result of the Japanese crisis.

“We may look at a couple of other things, but it has to fit with what we’re doing. Right now’s a great time to buy, because it’s not going to get any cheaper than this,” commented Adnani.

SUPPLY AGREEMENT

UEC was set to sign its first supply deal within the next two weeks, he added, declining to say who it was with.

“We’re talking to a number of these guys, I’m not sure which will be the first one, it’s just based on some fine details we’re negotiating.”

The company hasn’t sold any of its production yet, as it decided to hold off on signing supply contracts until the dust settled in the wake of the Japanese nuclear disaster.

In other nuclear news, trading company Traxys announced on Thursday that it would buy all the uranium that the US department of energy is using to pay a contractor to clean up a closed uranium enrichment plant.

The deal involved 1 605 tons/y of uranium Hexafluoride, which would have otherwise entered the spot market, putting pressure on prices.

China To Boost Nuclear Power Capacity Eight Fold By 2020

Published on Tuesday May 24 2011 (AEST)

China’s Nuclear Energy Association said May 12 it will boost atomic capacity as much as eight times by 2020. A day later, India’s Atomic Energy Commission said it will increase production 13-fold by 2030.

Even if Japan develops half of its proposed 19 gigawatts of nuclear power this decade, the country, together with China, India, Russia and South Korea, will add a combined 160 gigawatts by 2020, according to Bloomberg data based on figures from the World Nuclear Association, Sanford C. Bernstein & Co., the Federation of Electric Power Companies of Japan and South Korea’s economy ministry.

South Korea may almost double its nuclear-fired capacity to about 36 gigawatts by 2024, accounting for 48.5 percent of the nation’s power generation up from 31.4 percent today, according to the Ministry of Knowledge Economy. The country may add 10 reactors by 2020 totaling 12.8 gigawatts.

This global nuclear reactor build will require an extra 32,000 metric tons of uranium a year, according to calculations based on data from the World Nuclear Association. Global use will be about 69,000 tons in 2011. So 2020, uranium demand will be about 101,000 tons.

 

China and India will lead a 46 percent increase in consumption by the world’s five biggest atomic-power developers by 2020.

Uranium Rebound Seen As China’s Nuclear Plans Offset Fukushima

Published on Monday May 23 2011 (AEST)

The biggest drop in prices of uranium in two years may be ending as China and India plan atomic power developments that will more than double global production even after Japan’s nuclear disaster.

The radioactive metal has slumped 8.7 percent this year, the most since 2009, after tumbling as much as 27 percent as governments reviewed nuclear plants following the Japanese crisis in March, according to prices from MF Global Holdings Inc. China and India will lead a 46 percent increase in consumption by the world’s five biggest atomic-power developers by 2020, according to data compiled by Bloomberg.

Soaring energy demand from the world’s fastest-growing economies is buoying uranium and prospects of miners from Cameco Corp. to Paladin Energy Inc. even after radiation leaks from Japan’s 40-year-old Fukushima Dai-Ichi plant sparked the worst nuclear disaster since Chernobyl in 1986. China’s Nuclear Energy Association said May 12 it will boost atomic capacity as much as eight times by 2020. A day later, India’s Atomic Energy Commission said it will increase production 13-fold by 2030.

“The question is whether what happened in Japan with older-generation reactors justifies not building newer, safer reactors, and to me the answer is no,” Spencer Abraham, a former U.S. energy secretary who is now non-executive chairman of Areva SA, the largest nuclear-equipment producer, said in a May 17 telephone interview from Washington. “China recognizes they can’t satisfy the growth in electricity demand in a single dimension and they really need a diverse group of sources.”

Expanding Capacity

A gigawatt, enough to power about 1 million U.S. homes, requires 200 tons of uranium a year at full operating rates, according to the World Nuclear Association. China, India and South Korea expect to use 262 gigawatts by 2030, more than what the U.S., Japan, Germany and France produce together, according to Bloomberg data.

Nuclear energy was being held out by nations from the U.S. to France and the U.K. as a potential solution to challenges posed by rising oil prices, which reached a record $147 a barrel in July 2008. Unlike fossil fuels, atomic power produces virtually no greenhouse gas emissions, as governments around the world try to cut down on pollution.

Those considerations became secondary after the Japanese disaster showed construction flaws at the Fukushima plant. Tokyo Electric Power Co., the operator of the plant, posted a full- year loss of 1.25 trillion yen ($15 billion) on May 20.

Power Needs

None of that reduces the power requirements of the world’s fastest-growing economies. China’s economy will probably expand 9.5 percent this year, according to the median of 11 forecasts compiled by Bloomberg. India’s gross domestic product may grow as much as 8.5 percent in the current fiscal year, Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said on May 3.

“Fukushima has made us pause and rethink some of our projects,” Xu Yuming, vice secretary general of the Nuclear Energy Association, said in a May 12 interview in Beijing. “Of course, the overall plan won’t be changed. China faces power shortages and we need to change our energy mix. To resolve these issues, we must develop nuclear.”

Even if Japan develops half of its proposed 19 gigawatts of nuclear power this decade, the country, together with China, India, Russia and South Korea, will add a combined 160 gigawatts by 2020, according to Bloomberg data based on figures from the World Nuclear Association, Sanford C. Bernstein & Co., the Federation of Electric Power Companies of Japan and South Korea’s economy ministry.

Price Forecasts

That will require an extra 32,000 metric tons of uranium a year, according to calculations based on data from the World Nuclear Association. Global use will be about 69,000 tons in 2011.

Uranium, which trades outside organized exchanges directly between buyers and sellers, fell as low as $49.99 per pound of U308, the tradable form of the metal, in the three trading days after the March 11 earthquake as Germany and Japan announced reviews of nuclear plants. It settled at $57.99 on May 20, according to prices tracked by MF Global.

The metal may rise as high as $65 a pound this year and advance to $75 in 2012, Fletcher Newton, a vice president at Uranium One Inc., a Vancouver-based mining company, said in a May 13 interview. Morgan Stanley forecast it will climb to $64 in 2011 and $65 in 2012.

‘Still on Option’

“Whether we like it or not, nuclear is still an option that’s reliable, low cost and emission free,” said Amir Adnani, chief executive officer of Corpus Christi, Texas-based Uranium Energy Corp., a mining and processing company that is stockpiling the metal in anticipation of higher prices in the second half of the year. “In the next 20 years, the world’s nuclear capacity is going to double.”

A revival in demand may lead to a recovery in stocks of Saskatoon, Saskatchewan-based Cameco, a co-owner of the world’s largest uranium mine, to Subiaco, Australia-based Paladin, according to analysts.

Shares of Cameco may rise to C$37.40 in the next 12 months, said Raymond Goldie, an analyst at Salman Partners Inc. in Toronto whose recommendations on the 13 companies he covers returned 33 percent. The shares closed at C$26.36 on the Toronto Stock Exchange on May 20, down 35 percent this year.

Paladin may climb to A$3.50 in the coming year, after dropping 34 percent this year, according to Martin Stulpner, a Perth, Australia-based analyst at Macquarie Group Ltd. The stock closed at A$3.23 on the Australian Stock Exchange on May 20.

Not High Enough

Uranium prices still aren’t high enough to make it sufficiently profitable to extract, Rio Tinto Uranium Ltd. Managing Director Clark Beyer said at a conference in Beijing on May 13. The metal is at least $10 below the level required to encourage companies to increase production, he said.

Price gains may be held in check as Germany and Japan assess development plans.

Germany, which relies on atomic energy for 23 percent of its supplies, may phase out plants as early as 2022, Georg Nuesslein, a lawmaker for Bavaria’s Christian Social Union party, said in a phone interview on May 4. Chancellor Angela Merkel ordered a halt to the country’s seven oldest reactors on March 15, removing more than 25 percent of its 20,700 megawatts of capacity, equivalent to the power needed to supply almost 21 million U.S. households.

Japan, the third-biggest nuclear-power producer after the U.S. and France, is reconsidering plans to increase the share of atomic energy to 50 percent from 30 percent, Prime Minister Naoto Kan said on May 10. About 13 gigawatts of capacity is currently closed in Japan due to the earthquake, according to Societe Generale SA. No decision has been made on whether to restart the plants.

Global Consumption

“Unless we see a supply shock, it’s difficult to see a situation where we’ll see a dramatic increase in the uranium price, and that’s really the only catalyst that would bring investors back rapidly into the uranium space,” Edward Sterck, a London-based analyst at Bank of Montreal, said in a May 19 telephone interview. The metal will be little changed at $60 a pound this year and in 2012, he said.

Global electricity consumption will rise 75 percent to 35,300 terawatt-hours by 2035 from 2008’s 20,183 terawatt-hours, according to the International Energy Agency.

China’s safety review of its atomic power plants will have little impact on expansion, according to Xu at the Nuclear Energy Association.

India’s capacity will increase to 60 gigawatts by 2030 from 4.8 gigawatts, according to the country’s Planning Commission. South Korea aims to generate 60 percent of its energy from atomic plants by 2030, compared with about 35 percent now, Deputy Minister for Energy and Resource Policy Kim Junggwan said in an interview in Kuwait on April 18.

‘Growing Demand’

“Countries seek diversified sources of energy and security of supply at a time when energy demand is growing rapidly and is essential to an improved standard of living,” Cameco, part owner of McArthur River mine in Canada, the world’s largest deposit of high-grade uranium, said in a filing on May 6.

The U.S. Nuclear Regulatory Commission on April 21 renewed the operating licenses for the Palo Verde Nuclear Generating Station in Arizona, the country’s biggest atomic plant, for an additional 20 years. The U.S., which produces about 27 percent of the world’s nuclear power, had said it will scrutinize license renewals for utilities following the Japanese crisis.

“The right solution is to go forward and build safer, new- generation reactors,” Abraham said. “It will help diversify the fuel mix and contribute to energy independence. Overtime, cooler heads will prevail.”

Uranium Stocks A Bargain Now

Published on Saturday May 21 2011 (AEST)

The markets reacted with a sharp decline in uranium stocks. Orders were immediately put on hold and mining operations paused as the industry waited to see just what would happen. For investors who were already into uranium, their equities took a hit. However, for those looking to get into the mining industry, the opportunity for bargain shopping is everywhere.

When the devastating tsumani crashed into the Fukushima nuclear plant, world-wide fears of a meltdown, another Chernobyl, caused a panic reaction to shut down nuclear power plants and “rethink” nuclear power strategies in developed countries. 

President Obama ordered an evaluation of the US nuclear facilities, most of which were build 40 to 50 years ago. German Chancellor Angela Merkel shut down a number of plants and voice the same concern over nuclear safety. As the uranium rods in Fukushima over-heated and leaked radiation into the Pacific Ocean, fear of a nuclear apocalypse created the typical knee-jerk.

The fact of the matter is that even if uranium production slows as nations figure out their nuclear policies, there really is no other alternative at the moment to supply the world’s power demand. Older forms of energy production like coal and petroleum are not viable alternatives from an environmental impact perspective and quite simply, the world does not have enough coal or petroleum to supply the power. 

Wind technology is the best option but there is just not enough of it. Hydro or other naturally generated power does have a negative environmental impact and again, is in too short a supply. For example, British Columbia is a supplier of hydro power yet the government of BC imports power because much of the home grown voltage is sold to California.

There is really no other option for power in the near future, therefore, nuclear facilities will be turned on and uranium will be in demand. The bargain buy right now may be a chance to cash in.

Pakistan Opens Third Nuclear Plant With China's Assistance.

Published on Tuesday May 17 2011 (AEST)

ISLAMABAD: Prime Minister Yousaf Raza Gilani on Thursday inaugurated a 330-megawatt nuclear power plant built with Chinese assistance.

The plant is at Chashma in Punjab, where a Chinese-aided power plant of similar capacity is already operational.

“Today is a proud day for Pakistan and for Pakistan’s civil nuclear energy programme,” Gilani said as he commissioned the second unit.

“It is yet another illustrious example of the Pakistan-China cooperation in the field of nuclear science and technology,” he said.

Conctruction had begun on December 28, 2005 and was connected to the electricity grid on March 14, 2011.

The IAEA Board of Governors had unanimously approved the Safeguards Agreement between Pakistan and IAEA with respect to the Chashma-2 plant in November 2006.

Pakistan’s two research reactors (PARR-I & PARR2) and two nuclear power plants (KANUPP & CHASHMA-1) are already under the IAEA safeguards.

Chashnupp-2 is part of Pakistan’s “Energy Security Plan”, that envisages an increase in nuclear power generation from the current 425-megawatt to 8800-megawatt by the year 2030 to meet country’s growing energy demands.

Work on the Chashma-3 and Chashma-4 reactors with 300-megawatt each is also under way and will help add 600-megawatt to the grid.

Uranium Output To Quadruple In Two Decades, Says Ferguson

Published on Monday May 16 2011 (AEST)

Federal Resources Minister Martin Ferguson at a press conference at Parliament House in Canberra. Picture:

AUSTRALIA'S uranium output is expected to double in the next four years and quadruple within 20 years, Resources and Energy Minister Martin Ferguson said today.

Production in recent years has been hampered by wet weather at the Ranger mine in Australia's Northern Territory and a shaft failure at Olympic Dam in South Australia, Mr Ferguson said.

"If production meets predictions, tonnage will double within four years, and quadruple within 20," Mr Ferguson said in speech notes for an industry conference.

Although problems at Japanese nuclear power facilities caused by March's devastating earthquake and tsunami have led some nations to review their nuclear programs, Mr Ferguson said "nuclear power has a future".

"Nuclear is an important part of the energy mix for many countries. It is a cleaner energy option and powers millions of homes and businesses around the world," Mr Ferguson said.

Production from Uranium One's Honeymoon uranium mine in South Australia is expected to start in the "next few months", Mr Ferguson said, adding that BHP Billiton is now considering an expansion of Olympic Dam, which could boost its uranium output eight-fold.

Japan Won't Abandon Nuclear Power

Published on Monday May 09 2011 (AEST)

ATOMIC power will remain a major part of Japan's energy policy despite the ongoing crisis at one tsunami-crippled plant and a looming shutdown of another while its quake protections are improved.

Deputy chief cabinet secretary Yoshito Sengoku said no reactors other than the three units at the Hamaoka power plant in central Japan would be shuttered over quake and tsunami concerns.

There is "no need to worry" about other reactors, Sengoku said. "Scientifically, that's our conclusion at the moment."

The government evaluated Japan's 54 reactors for quake and tsunami vulnerability after the March 11 disasters that heavily damaged the Fukushima Dai-ichi plant in north-east Japan.

Chubu Electric Power Co., which runs the Hamaoka plant, is still considering the government's request to shut the reactors while the utility builds a seawall and improves back-up systems to protect the reactors from a major earthquake and tsunami.

Nuclear energy provides more than one-third of Japan's electricity, and shutting the three reactors would likely worsen power shortages expected this summer. Already, buildings have reduced lighting, stores have trimmed service hours and subway operators have shut air conditioning in a conservation effort in the capital region since the March 11 disasters.

After an executives' meeting Saturday failed to finalise a decision, Chubu chairman Toshio Mita left for Qatar to negotiate for liquefied natural gas supplies to cover the shortfall, company official Tatsuo Sawaki said.

The three reactors account for more than 10 percent of the company's power supply, company officials said.

Chubu Electric has estimated maximum output of about 30 million kilowatts this summer with the three Hamaoka reactors running, with estimated demand of about 26 million kilowatts.

"It would be tight," said another Chubu official Mikio Inomata, adding that officials are discussing possibilities of boosting output from gas, oil and coal-fuelled power plants and buying power from other utility companies.

The Hamaoka plant is a key power provider in central Japan, including nearby Aichi, home of Toyota Motor Corp.

The plant about 200km west of Tokyo has been known as Japan's "most dangerous" nuclear plant as it sits in an area where a major quake is expected within decades. About 79,800 people live within a 10-km radius.

Prime Minister Naoto Kan noted on Friday that experts estimate a 90 per cent chance of a quake with a magnitude of 8.0 or higher striking that region within 30 years.

"That makes Hamaoka an exceptional case," Kan told reporters on Sunday. He urged Chubu executives "to understand".

Since the March 11 disasters, Chubu Electric has drawn up safety measures that include building a 12-meter seawall nearly 1.5km long over the next two to three years, company officials said. Chubu also promised to install additional emergency backup generators and other equipment and improve the water tightness of the reactor buildings.

The Hamaoka plant lacks a concrete sea barrier now. Sand hills between the ocean and the plant are up to 15 meters high, deemed enough to defend against a tsunami around 8 meters high, officials said.

The operator of the Fukushima nuclear plant, Tokyo Electric Power Co., has said the tsunami that wrecked critical power and cooling systems there was at least 14 meters high.

Australian Energy Minister Backs Nuclear Power After Fukushima

Published on Wednesday May 04 2011 (AEST)

CANBERRA -(Dow Jones)- While the events at the Fukushima Daiichi nuclear plant in Japan have spurred a global re-assessment of the industry, Australia's Resource and Energy Minister Martin Ferguson said nuclear power will continue to play an important role in the global energy mix.

Safety must always be the first priority with nuclear power, and so the Australian government welcomes the reviews and any measures to strengthen and improve nuclear power systems that Fukushima has prompted, he said during a dinner speech for the South Australian Chamber of Mines and Energy.

"What I don't agree with are the comments by some that Fukushima spells the end of nuclear power and the end of uranium mining," Ferguson said.

There will be some changes in how electricity is generated, but for some countries nuclear will remain an important part of the mix as it goes to the question of energy security, he said.

In 2008, nuclear power accounted for 5.8% of total global energy supply, he said.

Australia holds a significant place in the global uranium industry. It hosts almost 40% of the world's recoverable resources of uranium, the fuel used to power nuclear reactors, though it meets less than 20% of global uranium demand.