Uranium faces continued bumpy ride

Uranium faces continued bumpy ride

Source and copyright: http://www.miningweekly.co.za/article.php?a_id=126044

By: Matthew Hill

Published: 4 Feb 08 - 18:26

The long-term fundamentals for the uranium price looked strong, with possible northward movement in the future, unless there was a worldwide recession, an expert on the nuclear fuel said on Monday.

The 2007 uranium spot price was plagued by volatility, shooting upward in the first half of the year to an all-time high of $138/lb, but then dropping nearly as quickly to trade at current levels of below $90/lb.

These prices would remain volatile until a clear picture of the future in supply and demand emerged, US consultancy firm Ux Consulting president Jeff Combs told his audience at the Mining Indaba, in Cape Town.

But, while the spot price might be dropping, long-term contracts were holding steady, at levels around $95/lb.

The factors affecting uranium's outlook included the number of nuclear reactors that countries around the world were building, and the fact that a large amount of the fuel used in these was produced by a few "megaprojects", which made supply susceptible to disruption, Combs said.

This was illustrated by flooding issues at mines like Canada's Cigar Lake project.

Some 50% of new uranium production would come out of Africa and Kazakhstan.

"There should be no problem if this production comes through to meet demand," Combs said.

However, he stated that these projects needed to be stepped up.

"The production response has been anaemic, except for Kazakhstan," Combs said.

On the demand side, there could be 86 countries producing nuclear electricity by 2050, which equated to 630 reactors that would need uranium to generate power.

China had a big appetite for the fuel, but Russia and India also had significant nuclear ambitions. There were also a number of European countries looking to boost their nuclear power generation capacities.

Egypt had also said that it would build its first nuclear reactor, with Turkey planning two to four of its own.

The Ukraine also had plans to build 15 000 MW of nuclear power capacity by 2030, Combs said.

The South African government had also declared nuclear energy to be a big part of its new power-generation capacity build programme, with 25 000 MW additional nuclear power-generation capacity to come on stream by 2025.

Source and copyright: http://www.miningweekly.co.za/article.php?a_id=126044