'There is hope for uranium yet' The Energy Report has a long interview today with Roger Lemaitre , president/CEO of UEX Corp. One of the things he talks about is a looming shortfall that will drive prices up within a few years. He also talks about the political issues (including international sanctions) that could have a dramatic impact on long-term Russian uranium supplies. This excerpt is from pare 5:
TER: How does uranium's future depend on the construction of new reactors and the replacement of old ones?
RL: That's what's driving the business. The market is completely out of equilibrium now. A decade ago, only half the uranium demand was supplied by primary uranium production from new mines. Back then there were large stockpiles and secondary sources of uranium, but those have largely disappeared. As little as three to four years from now, we're going to have a uranium supply shortfall.
Today, we are definitely in that nuclear renaissance the industry was talking about five years ago. If you look out at the new reactor builds, we're seeing 25% net growth in nuclear power. In the next 20 years, we can expect many new reactors and fewer retirements. That kind of growth hasn't been seen since the 1970s and 1980s, and it's being driven by the developing countries. In three years, China will have installed more nuclear capacity than Japan has sitting idle right now.
TER: Does the prospect of sanctions against Russia affect the uranium industry?
RL: Yes, especially from the utilities' point of view. Half the world's commercial enrichment capacity is in Russia. If the sanctions continue, this will be imperiled. The Russians have the ability to enrich uranium and are looking to export it. Electric utilities that are worried about their supply chains know that it takes about three years to take a drum of yellowcake and turn it into fuel pellets. If half the supply chain disappears, or there's a clog in the middle, the utilities will be in trouble.
The oversupply in the uranium market today is due to the fact that five or ten years ago prices were high, so suppliers entered into long-term contracts. These contracts will begin to taper off in 2016–2018. After the Fukushima disaster in 2011, some excess inventories were sold off. Today's market doesn't reflect the coming termination of these long-term contracts. When the Japanese restart their reactors, supply will again be at a premium. It's a question of when, not if.
TER: Is China capable of supplying all the uranium needed for its new reactors?
RL: Absolutely not. The Chinese have been big buyers in uranium markets, and new reactors require more uranium than those already in operation. We call this the "initial cores." China has been buying on this basis for six or seven years, and this will continue for some time.
There is hope for uranium yet
Link: https://www.resourceinvestor.com/2014/11/12/theres-hope-for-uranium-yet?ref=hp