Expectation of Chinese demand drives up uranium price
From: The Australian December 03, 2010 12:00AM
EXPECTATIONS of demand from Chinese nuclear reactors has pushed uranium spot prices to recent highs and threatens to cause a supply deficit.
China's need for nuclear fuel to serve its growing energy requirements had heightened the potential for supply problems in the uranium industry, Laramide Resources and Australia's Encounter Resources said on the sidelines of the Mines and Money Conference in London.
"The Chinese bumped long-term forecasts for their nuclear build-out and although there is actually no physical demand it has totally changed the psychology," Laramide chief executive Marc Henderson said. "There has been a major movement in the spot price since September and I don't think anybody foresaw it."
Encounter's exploration director, Peter Bewick, said: "We have seen the spot price go up to above $US60 a pound, which is certainly at least a 50 per cent rise in the last four months.
"When the weapons processing program finishes in 2013 there is just generally a shortage of uranium going forward -- so it is a supply-demand issue."
In the post-Cold War era, secondary sources of the metal, such as from decommissioning Russian nuclear weapons, became a significant supply for the energy industry.
Steve Kidd, director of strategy and research at the World Nuclear Association, told the conference that "primary supply does need to increase sharply" due to increased demand, especially from China.
He said in order to achieve this, development companies "need to talk to the Chinese about off-take agreements and equity investments, but they will (eventually) come running when they need more supply in 2020".
"A reasonable range the uranium industry needs on the production side, to get mines online and supply discovered, is a price between $US60/lb and $US90/lb," Mr Henderson said.
Mr Bewick said: "The long-term price is maybe only going to be a little higher than the spot price at about $US65/lb."
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