Despite the depressed uranium spot prices amid fears that some countries will shutdown their nuclear reactors, and expectations that many countries will decrease their nuclear programmes since the nuclear incident at Fukushima early March, Extract Resources this week remained upbeat about the future of the nuclear industry. Extract Resources, developers of the the Husab project, the fourth largest uranium mine in the world, said Wednesday that the fundamentals of the uranium market remain positive despite the decline in short-term uranium prices following the nuclear accident at Fukushima.
The company said its belief was underpinned by a projected increase in global nuclear power production in the near future. It expects increasing global energy demand as global electricity consumption doubles by 2030. Future trends such as the increasing shortage of fresh water globally requiring the deployment of desalination plants; hydrogen production for transport use and the potential implementation of electric cars all have the potential to increase electricity consumption, the company said in its annual report. The company said increasing concerns about the impact of climate change augured well for the nuclear industry as reduced usage of fossil fuel is now an important goal for decision makers, the media and the public. Post Fukushima, generation options are being reviewed, but nuclear power remains the single most significant means of large scale base load generation which reduces greenhouse gas emissions. Extract Resources, which also indicated that it has now started funding talks for the US$1.66 billion Husab project, added that there was now an increased focus on security of supply leading to diversification of energy sources. It further said that uranium demand growth will also be driven by significant nuclear programmes in China, South Korea and India, which seek to bring the proportion of their electricity derived from nuclear power into line with that in Europe and North America. For example, China alone has close to 29GWe (gigawatt electric) currently under construction and due to come online within the coming five years. Around 14% of the world electricity in 2010 was generated from nuclear power. As of June 2011, 30 countries were operating 441 nuclear reactors for electricity generation and 60 new nuclear plants are under construction in 13 countries. Uranium production during 2010 was 140 million lbs U3O8, almost 40 million lbs below uranium demand of 180 million lbs, with the deficit being met from secondary supply from various forms of inventory held by governments and commercial entities. Extract said at least 40 million pounds per annum of capacity from new mines will be needed from the middle of this decade, just as Husab is ramping up to full production.
BOBCOCK...
EXT Price at posting:
$8.25 Sentiment: Buy Disclosure: Held
