Uranium prices are low and there is plenty of uranium in the ground that could be mined to increase production. However, miners have to time the development of uranium to match increasing demand but not before oversupply and inventories are mostly used up. This way uranium prices will increase to make uranium development profitable.
There is already a gap between the uranium consumed by reactors and the uranium produced from the world’s mines, which has been the case for many years. That gap has been bridged by secondary supplies – uranium in various forms that is already out of the ground and sitting in stockpiles around the world. Today, about 20% of global supply comes from secondary sources, but those stockpiles are being drawn down, and are expected to contribute less and less over time. This means that more primary production will be needed from uranium mines – in fact, we estimate about 10% of total supply required over the next decade will need to come from new mines that are not yet in development.
There are two key challenges to primary supply: timeliness and cost. The long-lead nature of uranium mine development means that our industry is unable to respond quickly to sudden increases in demand or significant supply interruptions – bringing on new production can take between seven and 10 years. And now with recent lower uranium prices, we’re seeing delays and cancellations as new projects become uneconomic.
Developing production capacity to meet the world’s uranium needs, rather than the availability of uranium resources, is a likely challenge over coming years according to the latest edition of the OECD Nuclear Energy Agency (NEA) and International Atomic Energy Agency (IAEA) joint report on uranium resources, production and demand.
A 10% increase in overall worldwide uranium exploration and mine development expenditures since the previous Red Book could largely be attributed to development activities at only two projects: Cigar Lake in Canada, and Husab in Namibia. Exploration expenditures themselves continued to decrease because of low uranium prices, the report found, and no significant resources were added to the resource base during the reporting period.
The highest exploration and development expenditures in both domestic and non-domestic projects over the reporting period were by China, with a steady increase in domestic exploration expenditure from $131 million in 202 to $197 million in 2014 and an expected $199 million in 2015. Brazil, the Czech Republic, Jordan, Mexico and Turkey also reported increased expenditure on domestic uranium exploration and development during the period. China’s non-domestic exploration and development expenditure – principally through investment in the Husab mine in Namibia – rose from $82 million in 2012 to $753 million in 2014 and an expected $778 million in 2015. Total world non-domestic uranium exploration and development expenditure was found to be $813 million in 2014 and an expected $846 million in 2015.
Uranium production, at 55, 975 tU as of 1 January 2015, was 4.1% down from the previous report, with Kazakhstan, the world’s leading producer, continuing to increase production but at a slower pace than before.
Demand for uranium is expected to continue to rise “for the foreseeable future”, the report found. Taking into account policy changes and revised nuclear development plans announced in some countries, the report projects world nuclear capacity to grow to between 418 GWe, in its low demand case, and 683 GWe, in its high demand case, by 2035. Accordingly, annual reactor-related uranium requirements are projected to rise from 56,585 tU as of 1 January 2015 to between 66,995 tU and 104,740 tU by 2035.
Although total identified uranium resources have only increased by 0.1% since the previous edition of the report, the currently defined resource base is “more than adequate” to meet even high-case uranium demands to 2035. Whether it will do so will depend on “timely investments to turn resources into refined uranium ready for nuclear fuel production,” the report finds.
SOURCES- Cameco, World Nuclear News