Uranium To Exceed $50 On Olympic Dam Slowdown, Macquarie Says

Great News For The Uranium Bulls

Uranium will rise above $50 a pound in coming weeks because of reduced production at BHP's Olympic Dam mine in Australia, Macquarie Bank Ltd. said.

Prices have added 9.8 percent over the past two weeks on concern about reduced supply following an accident at Olympic Dam, the world’s fourth-largest producing uranium mine. Uranium oxide concentrate for immediate delivery traded at $47.75 a pound on Oct. 19, Roswell, Georgia-based UxC said in a weekly report.

“Uranium will go up into the low $50s over the next month, Max Layton, an analyst at Macquarie in London, said by phone today.

Full production at Olympic Dam will only resume by the end of March after repairs to a damaged shaft, BHP, the world’s largest mining company, said on Oct. 20. The company declared force majeure that day on some supply contracts at the world’s largest uranium deposit, permitting it to miss deliveries because of an event beyond its control.

Olympic Dam, which produces copper and gold as well as uranium, accounted for 8 percent of global output of the nuclear fuel last year, according to the World Nuclear Association. The mine produced 3,384 metric tons of uranium last year, and the slowdown may cut output by about 1,200 tons through to March, Layton said.

“If the delay goes beyond the end of March and they have depleted all their inventories, they would probably need to be buying in the spot market,” he said.

A mechanical failure forced the shutdown of the main haulage shaft at Olympic Dam on Oct. 6. Ore hoisting will be at about 25 percent of capacity until repairs have been completed, BHP said on Oct. 20.

My Personal view... Is that we may well see a Spot Price exceeding US$80.00 P/Lb Before Years end.