MARKET COMMENTS Despite the continuing favourable environment for nuclear power worldwide and long term uranium prices remaining at historically high levels, global uranium production only increased by 6.5% in 2008 compared with 2007 (51,837t U3O8 compared with 48,709t U3O8). Production in the two leading uranium countries, Canada and Australia, actually fell by 775t U3O8. Conversely, Kazakhstan production rose by 28% to 10,050t U3O8, edging Australia into third ranking, highlighting the increasing dependence of the nuclear power industry on non-traditional supply sources. The news that the former President and three Vice Presidents of Kazatomprom, the state-owned nuclear holding company, had been arrested on suspicion of irregularities concerning foreign investments in uranium resources has heightened concerns about security of supply in some sectors of the global industry. In contrast, uranium production in Namibia increased by 52% to 5,152t U3O8 making Namibia now the fourth-largest producer and drawing attention to Africa as a growing uranium supply source, in large part as a result of Paladin’s success at Langer Heinrich in Namibia and more recently Kayelekera in Malawi.
The Ux spot price recovered from a recent low of US$40/lb U3O8 in April 2009 to close at US$52/lb U3O8 at the end of June. The long term indicator price eased from US$70/lb U3O8 to US$65/lb U3O8 in April and remained at that level during the quarter. The small increase in global uranium production referred to above should be compared with world uranium requirements of 76,110t U3O8 in 2008. This will increase as new nuclear power plants are commissioned worldwide while simultaneously the contribution of secondary supply sources diminishes significantly over the next five years, exposing the increasing supply shortfall that will increasingly have to come from mining and which is expected to propel the market upwards in the future.
AGS Price at posting:
81.0¢ Sentiment: LT Buy Disclosure: Held
