uranium transfers canceled for 2011, page-11

The uranium spot price is now chugging along at about $50/lb, with contract prices at $60/lb. Why has the price not responded to the improved market sentiment? Speaking at the international Mining Indaba in Cape Town this week, Gene Clarke, CEO of US-based uranium consultants TradeTech, said the main factor has been so-called secondary supplies. This refers to uranium stored in nuclear warheads being reprocessed for use in nuclear power generation.

This programme is set to expire in 2013, however, when Russia will have dismantled about half of its nuclear warheads. The US has also built up stockpiles of uranium over the past 40 years, but these supplies have been run down as operational problems have curtailed mine production. An example here is the flooding at Canada's big Cigar Lake mine.


A lot is happening on the demand side and the China factor will have a significant effect on the uranium industry. According to the World Nuclear Association, there are 437 nuclear power plants operating globally. An additional 56 are under construction, while 100 are planned and 270 or more have been proposed.


If all of these were to come to fruition, the number of nuclear reactors will double over the next two decades.


China produces about 2% of its power from nuclear sources, which is set to rise to about 5%. Clarke says this means that by 2025 China will be consuming half of global uranium production.


The Asian powerhouse has been rushing to bring new generation capacity to meet the demands of rapidly increasing urbanisation. Much of this has been fuelled by coal, but climate change concerns mean nuclear will have to play a more meaningful role, as it will in India.


According to Clarke, the political winds have also been shifting with regard to nuclear energy in Germany and the UK. Both countries had over the past couple of decades been moving away from nuclear power, decommissioning plants.


"Rather than shutting down their nuclear plants, at least they will maintain the currently operating plants in Germany and probably expand with new ones," says Clarke.