Uranium demand to nearly double by 2030Brooke Showers Wednesday,...

Uranium demand to nearly double by 2030
Brooke Showers Wednesday, 12 September 2012
JAPANESE reactor restarts will form a key part of the short term price outlook for uranium, a report has shown while the near term market will remain dependent on demand.
Mining investment advisory, Resource Capital Research released the Merrill Lynch Uranium Equity Index today which revealed global uranium equities were up 2% in the past month and up 12% in the past three months.
“We expect neutral uranium equity market performance over the next six months with downside risk to surplus utility uranium disposals and uncertainty around the anticipated release of Japanese energy policy to 2030,” RCR analysts cited in the Uranium Sector Review paper.
RCR said there was potential for a supply gap to open up in the uranium market midterm due to declining supply from existing mines, the deferral of new mining projects and ongoing demand growth.
According to the review, demand for uranium is expected to increase from around 164 million pounds per annum uranium oxide in 2011 to 226Mlbpa by 2020 and 280Mlbpa by 2030.
Further, the anticipated reduction in secondary supply with the termination of highly enriched uranium at the end of 2013 was also expected to create a supply gap.
RCR forecast strong growth in nuclear reactors to continue post Fukushima, with Chinese expansion tipped to continue leading the pack.
There are 483 nuclear power reactors planned or proposed globally and of these 65 are under construction and more than 80 new reactors are expected to be commissioned by 2018.
A delay in Japanese reactor restarts was found to be affecting uranium prices.
Spot uranium is currently fetching $US48 per pound, according to RCR, down $2.75/lb from $50.75/lb in June.
“Price weakness is resulting from the protracted delay in Japanese reactor restarts with 48 of the 50 operable reactors offline nearly 18 months after the Fukushima accident,” RCR said.
RCR said the long-term contract uranium price was $60.25/lb which marked a modest pullback from $61.25/lb between May to July, and had increased from a recent low of $60/lb in February to March this year.
Although some market participants suggested the August price pullback reflected slow seasonal summer trading, RCR noted it was surprising given the recently announced uranium project deferrals and delays from projects such as BHP Billiton’s Olympic Dam mine in South Australia and Cameco’s Kintyre and Yeelirrie uranium projects in Western Australia.
Meanwhile, among the more promising uranium projects, research showed share price performance of Energy Resources of Australia was down 8% in the past month and Paladin Energy was up 2%.
RCR said the net present value for ERA of $A1.75/share was highly leveraged to exploration, social and environmental outcomes, although the company had the potential to transition to underground production by the fourth quarter of 2015.
Paladin was moving forward on multiple fronts with production improvements at Leinger Heinrich and Kaylekera, RCR analysts said.
The uranium player was also reviewing its joint venture partners for Australian projects, ramping up exploration at Michelin and Manyingee and was holding a stronger balance sheet, recently boosted by the $US200 million ($A190 million) Michelin off-take payment.