March 22, 2012

Global Uranium Demand Expected To Unprecedented Levels

Published on Thursday March 22 2012 (AEST)

GROWING use of nuclear fuel for power generation in countries like China will push up global uranium demand by 42 per cent between next year and 2017, according to the Bureau of Resources & Energy Economics

This is despite the current drop in demand caused by plant closures in Germany and temporary mothballing of plants in Japan after the Fukushima disaster.

BREE forecasts a global price of about $US53 a pound in 2012, a drop of 7 per cent on the 2011 average price, but in line with where it spent the second half of the year.

It says China's consumption of uranium is likely to triple between 2011 and 2017 to about 15,500 tonnes a year as reactor numbers rise from 16 to 60. China's 44 new reactors compare with 49 Japanese reactors that have been temporarily closed for safety inspections. Global demand will jump about 7 per cent a year from 77,000 tonnes in 2012 to about 110,000 tonnes by 2017, it predicts.

By comparison BREE expects Australian production to climb by about 12 per cent a year between now and 2017, even before completion of the Olympic Dam expansion. The biggest jump in supply is expected to come from Australia and Southern Africa.

Rio Tinto's Rossing mine in Namibia is expected to lift output by 4 per cent this year to 10,700 tonnes after grade troubles pushed 2011 production down 2 per cent.

The bureau expects Australian production to rise from about 7100 tonnes a year to about 13,500 tonnes in 2016-17, thanks mainly to the ramp-up of new mines such as BHP Billiton's Yeelirrie operation, expected to produce 3500 tonnes of U3O8 a year. The list includes Uranium One's Honeymoon mine, still in startup phase, and in the future Toro Energy's Wiluna operation, Energy & Metals Australia's Mulga Rock operation, Mega Uranium's Lake Maitland mine, and Energy Metals' Bigrlyi mine in the Northern Territory.

BREE does not expect to see a sharp rise in the global uranium price until 2015, but projects prices close to $100 a pound between now and 2015, rising to $124 in 2016 and $141.6 in 2017, in constant 2011-12 Australian dollars.

It notes that a drying up of supply from defunct nuclear warheads and nuclear waste ("secondary sources") will be part of the overall global picture in the next few years, while "strong consumption growth from a large number of new reactors starting up, particularly in China, India and the Russian Federation", will be the main drivers of price rises.

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