Two years ago the price of uranium was languishing at around $US10 a pound. Since then the price has shot to almost $US30, spawning a revival in the metal’s prospects.
Two years ago the price of uranium was languishing at around $US10 a pound.
Since then the price has shot to almost $US30, spawning a revival in the metal’s prospects.
But investors have been historically slow to pick up on the enthusiasm for the commodity expressed by the proponents of uranium. Now, it seems, those supporters predict even higher prices in a looming tight market, as Australia grapples with the need for more exploration and development.
The market forces behind this prediction, according to miners, relate to an expected shortfall in uranium stocks, and strengthening demand from more nuclear power plants.
Speaking at the Association of Mining and Exploration Companies Conference, representatives from Paladin Resources and Canadian-based Cameco Corporation forecast that an additional 80 million pounds of uranium will be needed to be produced per year, by 2020, if growth of nuclear power continues at its current pace.
Overall, the companies are predicting a shortfall of an accumulated 600 million pounds over the next 15 years.
As well, the role of secondary uranium sources, including stockpiles from former weapons programs in the US and Russia, will drop significantly, according to James Eggins, marketing manager at Perth-based Paladin, which expects to be the world’s fifth largest producer by 2008.
By conservative estimates, the secondary supply source will drop from about 40 to 17 per cent over the next 15 years, Mr Eggins said.
“My personal view is that prices will rise further before they decline,” he said.
There has also been concern as to whether nuclear power can remain economical at the expected higher prices. Mr Eggins rebuts this argument, however, claiming that fuel costs amount to just 20 per cent of the total operating cost of the plants.
Paladin managing director John Borshoff said people didn’t realise the looming shortfall until 2003.
On the demand side, in May this year there were 439 reactors operating in 31 countries, with 25 more under construction, 39 ordered or planned and 73 proposed, according to the Melbourne-based Uranium Information Centre.
But the Ranger uranium mine – producing about 5,000 tonnes a year and one of the three mines in Australia permitted to operate under the Australian Labor Party’s three mines policy – is expected to be closed in 2008.
And given development times can often be up to 25 years, Australia will miss out on a large slice of the market if it does not fully commit to mining efforts, according to Ron Matthews, exploration manager at Cameco Australia, part of Cameco Corporation, the world’s largest uranium producer.
“The present upsurge in interest and activity needs to be translated to an incentive in exploration and development,” Mr Matthews said.
