Plenty of reference to ISR production in this article...
Very interesting.
Uranium
Michael Lampard
In the first eight months of 2009, the uranium spot price averaged US$47 a pound, which was 30 per cent lower than for the same period last year. The uranium spot price has been relatively stable so far in 2009 despite volatility in other energy spot prices, as increased demand has been met by higher supply.
Liquidity in the uranium spot market has increased significantly since 2005 when the spot market was opened to investors. According to Ux Consulting, the volume of uranium sold on the spot market reached a record 7000 tonnes U3O8 in June 2009. Increased liquidity in the spot market has been primarily driven by the increased presence of discretionary activity (defined as purchases of uranium that are not intended to be used in the short term). A component of discretionary activity is speculative investment which moves in response to market sentiment. Increased discretionary activity (in particular speculative selling) in the spot market, underpinned by market sentiment to sell commodities, is likely to have contributed to recent downward pressure on uranium prices. Conversely, speculative buying is thought to have contributed to rising spot prices between March 2005 and April 2007.
Uranium spot prices to average lower in 2009 before increasing in 2010 Uranium spot prices are expected to remain around their current levels for the remainder of the year. For 2009 as a whole, the uranium spot price is forecast to average around US$46 a pound, which is about 25 per cent lower than the average in 2008. In 2010, the uranium spot price is forecast to average around US$57 a pound, being an increase of 22 per cent on 2009 prices. The higher price in 2010 is expected to be underpinned by stronger consumption growth.
September quarter 2009
Large scale uranium producers sell most of their production through long-term contracts, while smaller operations sell the majority of their output on the spot market. The indicative long-term uranium price, quoted by Ux Consulting, has not been as volatile as the spot price in recent years, although it has increased substantially. Year to date, the long-term contract price has averaged US$67 a pound. However, long-term contract prices vary between companies because of differences in contract lengths, volumes and market conditions at the time of signing. For example, in Australia, the average long-term contract price has been lower than the world indicator contract price because some contracts were signed at a time when spot prices were lower.
Demand for U3O8 to increase in 2009... Uranium is primarily used as a fuel in nuclear reactors. Nuclear reactors are commonly used for baseload electricity generation and are run at close to operational capacity. As a result, changes in world nuclear generating capacity is the main factor influencing demand for uranium. As of August 2009, there were 436 nuclear reactors operating worldwide, with a total generating capacity of nearly 373 gigawatts electric (GWe).
In 2009, four nuclear reactors with a combined capacity of 1.5 gigawatts electric are scheduled to be commissioned while one reactor in Lithuania (1.2 gigawatts electric) is expected to be shut down. India has plans to start up three generating units in 2009 with a total combined capacity of 0.6 gigawatts electric, which will increase India’s total nuclear generating capacity to 4.5 gigawatts electric. All three units are locally designed 0.2 gigawatts electric Pressurised Heavy Water Reactors. In Japan, the 0.95 gigawatts Tomari 3 reactor is also scheduled to begin operations in the final quarter of 2009.
Also in Japan, Unit 7 of the Kashiwazaki-Kariwa nuclear power plant (1.31 gigawatts electric) was restarted in May. All seven units of the plant (8.2 gigawatts electric) were closed in 2007 following an earthquake. Although the reactors were not damaged, maintenance work was undertaken to ensure the reactors would be able to sustain an earthquake of a similar magnitude again. Six units of the Kashiwazaki-Kariwa reactor remain closed and are expected to be progressively restarted from 2010. In 2009, the start-up of new reactors combined with the restart of Unit 7 at the Kashiwazaki- Kariwa nuclear power plant is forecast to result in world uranium consumption increasing by 2 per cent to 77 720 tonnes U3O8 in 2009.
World uranium consumption in 2010 is forecast to increase by 6 per cent to 82 160 tonnes U3O8. Eight nuclear reactors with a combined capacity of 6.6 gigawatts electric are expected to be commissioned in Argentina, China, India, Iran, the Republic of Korea and the Russian Federation. In addition, Units 1 and 2 of the Bruce reactor in Canada are expected to be restarted. These two units were closed in 1995 following a maintenance accident and have a combined capacity of 1.5 gigawatts electric. These units were brought back into production in response to higher electricity prices.
The start-up of these generating units combined with the staged restart of the Kashiwazaki- Kariwa reactor and power up-rates (the process of increasing the generating capacity of a reactor) in the United States, Mexico and Finland are expected to result in around 4400 tonnes of additional U3O8 consumption in 2010.
Strong global uranium supply growth in 2009 In 2009, uranium mine production is forecast to increase by 9 per cent to 56 140 tonnes U3O8, supported by large production increases in Kazakhstan and Africa.
In Kazakhstan, uranium production is forecast to increase by nearly 28 per cent to 12 800 tonnes U3O8 following the start-up of three in situ recovery (ISR) operations. These include Kazatomprom’s Semisbai (2300 tonnes U3O8), Kyzylkum Joint Venture’s Kharasan Two (2000 tonnes U3O8) and Semizbai-U Joint Venture’s Semizbai (500 tonnes U3O8) operations. In addition, eight mines commissioned in Kazakhstan over the past two years are expected to increase production as they approach capacity.
In Africa, Paladin Energy’s Kayalekera mine (1500 tonnes U3O8) commenced production earlier this year in Malawi, while First Uranium’s Buffelsfontein mine (540 tonnes U3O8) in South Africa is expected to commence production later in the year. All up, these mines are expected to result in African production increasing by more than 700 tonnes U3O8 in 2009.
Uranium production is forecast to increase by 5 per cent to 58 750 tonnes U3O8 in 2010 as production continues to increase in Kazakhstan and Africa. In Kazakhstan, uranium production New nuclear reactors scheduled for completion in 2009 and 2010 498 Australian commodities • vol 16 no 3 • September quarter 2009 is forecast to increase by 8 per cent to 13 800 tonnes U3O8. The increased production will be sourced from mines that commenced production in 2008 and 2009. No new mines are scheduled to start production in 2010.
In Africa, mine production is forecast to increase by 13 per cent to 11 500 tonnes U3O8 as UraMin’s Trekkopje project in South Africa is commissioned and mines started in 2009 continue to approach capacity.
Secondary supplies to remain stable Since the 1990s, a significant proportion of world uranium demand has been met by secondary supply sources. These include reprocessed spent nuclear fuel, which is downblended highly enriched uranium from nuclear weapons and mixed oxide fuels. The largest component of secondary supply has been the conversion of highly enriched uranium from dismantled nuclear weapons and government stockpiles in the United States and the Russian Federation. The supply of uranium from secondary sources is expected to remain stable at around 21 000 tonnes U3O8 in both 2009 and 2010. Uranium mining techniques – In situ recovery (ISR) In situ recovery (ISR) is a uranium mining process that involves extracting uranium without removing ore from the ground. The process uses water that generally contains sulphuric acid and in most cases an oxidant (hydrogen peroxide). This solution is pumped into the underground ore body through a series of injection wells where it moves down the deposit leaching the uranium bearing ore. At the bottom of the ore body, extraction wells capture and return the solution to the surface using submersible pumps. Once returned to the surface, uranium is recovered from the solution which is then replenished with sulphuric acid and hydrogen peroxide before being returned to the injection wells.
The in situ recovery method is increasingly used to mine uranium as the process requires limited surface disturbance, generates no tailings, has low capital costs compared with conventional mining and is often more efficient at mining low-grade uranium deposits.
In 2008-09, Australia’s uranium production increased by 2 per cent to 10 311 tonnes U3O8. The small increase reflects higher production at Energy Resources of Australia’s (ERA) Ranger mine in the Northern Territory, which offset a small decline in production at BHP Billiton’s Olympic Dam mine in South Australia. Production at Ranger increased in the first half of 2009 reflecting the processing of higher grade ore and the commissioning of a laterite processing plant (used for the processing of high clay content ore). Australia’s uranium production in 2009-10 is forecast to increase by 2 per cent to 10 520 tonnes U3O8. Contributing to this increase is the expected start-up of two mines, Uranium One’s Honeymoon and Quasar Resources Four Mile ISR operations. Both mines are located in South Australia and are expected to be in production by the middle of 2010. Four Mile will have a capacity of nearly 1400 tonnes U3O8 and will be Australia’s third largest uranium operation, while Honeymoon will have a capacity of 400 tonnes U3O8 and will be Australia’s smallest operating uranium mine.
In 2008-09, the value of Australia’s uranium exports increased by 12 per cent to $990 million as higher export prices more than offset a small decline in export volumes. Despite uranium spot prices averaging lower in the financial year, Australia’s average export unit price increased by 13 per cent, primarily reflecting higher contract prices received by ERA in the second half of the financial year.
As all of Australia’s uranium production is exported, uranium exports are forecast to increase in line with higher production in 2009-10. Export unit prices for uranium are forecast to average higher in 2009-10, reflecting higher contract prices at the Ranger mine. Higher export volumes and prices are forecast to result
Article on web at: http://www.abareconomics.com/publications_html/ac/ac_09/ac09_Sept_a.pdf
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