TORONTO (miningweekly.com) - Analysts said on Wednesday there was no“breakthrough” in China’s uranium reprocessing capabilities, and therewould be no impact on the market for the fuel.
“The bottom line is there was no breakthrough, there will be zeroimpact on Chinese demand for uranium,” UxC senior vice president Mike Smith stated in an interview.
This came after China Central Television reported on Tuesday thattechnology developed by China National Nuclear Corp could extend thecountry’s uranium resources to last 3 000 years.
China Daily – the State-owned paper targeted at Westerners – said thefollowing day in a front page headline that the move would solve thecountry’s uranium shortage.
Dundee Securities analyst David Talbot was equally sceptical.
“We don't put a lot of credence into this spin about a Chinesebreakthrough,” he said in a January 5 note titled “China's uraniumreprocessing hype”.
Talbot pointed out that the uranium spot price actually rose after theannouncement suggesting that “recent uranium buyers don't believe theChinese reprocessing hype either”.
Smith told Mining Weekly Online that the Chinese had been innegotiations with French nuclear company Areva regarding technologytransfer, and there was speculation that the announcement of atechnological “breakthrough” could be related to this.
“There has been speculation that negotiations are not going very well”and the government might be trying to pressurise Areva, he said.
According to Smith, China had been reprocessing uranium for 50 years –that is how the country made its nuclear weapons – and the announcementwas regarding strides made on the commercialisation of the technology,which the country was still “20 years away” from making it economicallyviable.
“Nothing is different from what it was on Sunday night,” he affirmed.
Talbot said: “We believe that this news should have no effect on thecurrent supply demand situation - and if this technology is real, itsimplementation is unlikely for 10 to 15 years or more.”
Fuel reprocessing was currently being used by Japan, UK, France andRussia and accounted for about 3% of world nuclear fuel supply.
PRICES TO RISE FURTHER
Meanwhile, another UxC analyst, Eric Webb, said that both long-term contract and spot uranium prices would likely clock further increases this year.
“If prices have a decent year, spot would close 2011 maybe 10% higher, just under $70/lb,” he told Mining Weekly Online in a separate interview. Prices were $62,50/lb on January 3.
“I don’t foresee a huge increase over the year – we’re not going to have a repeat of 2007.”
Denver-based TradeTech said earlier this week that there had been arecord volume traded in the spot market last year, at 42,8-millionpounds.
“China’s ambitious nuclear power expansion plan and the signing of twonew contracts for its long-term uranium supply attracted renewedinterest from the financial and investor sectors and propelled the pricemovement,” TradeTech president Treva Klingbiel said in a statement.
UxC said, however, that there had been 50-million pounds traded last year, compared with 55-million pounds in 2009.
‘MAGIC LEVEL’
UxC’s Webb said that the $60/lb level was a “magic” one, as producersneeded the fuel to sell at this minimum threshold to justify buildingnew mines.
It was also a key level that affected how much uranium enrichment plants needed feed into their plants.
“It’s like making apple juice... the harder you squeeze an apple, themore juice you get out. But it also costs more to squeeze harder,” hesaid.
Edited by: Liezel Hill PT2