Gdawg, I havent been through this before.
And to be honest, I only partially understand the economics and nature of U enrichment and the impact that may have with utilities going to market.
I think we can state some obvious facts though:
1. A utility will have some form of contract to buy Uranium and some form of contract with enricher services. Enrichment is not cheap and becomes uneconomic the more times you try to extract enriched U from your stockpile.
2. The utlility/enricher will act as its own mine where it is economic to do so - that is by enriching tails assay where possible. How a utility comes to this decision is beyond my expertise. However it is obviously some calculation of their U and SWU contract costs, spot market costs for both, and then optimising the tails assay using a calculation that would be similar to one here:
https://urenco.com/swu-calculator/
3. Considering a number of variables to enrich or keep enriching, a utility may decide to by more U from miners than continue to enrich their stockpiles. I think of this as a tidal flow. Sometiems it is away from the producers like now, and sometimes theres a rush to sure up U from miners. The more you enrich the more SWU is required to extract enriched uranium. Hence, there is a crossover point where it becomes uneconomical to keep enriching.
4. Enrichers can potentially sell leftover natural uranium which becomes another source of supply (opaque)
5. It is not one or the other - there is a tradeoff between how much U a utility wants to contract versus how much enriching can be achieved economically. I'd suggest they might typically strike a balance in a non-volatile market.
6. Regardless of a low cost enriching environment, there is still a major problem for the industry. That is, it has been uneconomical to mine for some time. There is a finite amount of underfeeding and enriching that can be achieved before Utilities need more capacity from U miners. When that cross over point occurs is unknown but is likely to drive higher contract prices. Please see Gavin';s response to my theory ove on PEN.
In regards to point 6, I think this is key. In my opinion is the power plants contract on what they forecast might happen over their contract term with respect to cost variables for a fixed amount of required fuel. It is possible that in the last price boom, there was a rush to contract because of a fundamental belief with power plants that enriching more than once was becoming uneconomical.
(20min delay)