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Released February 24, 2017 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Uranium spot prices have shot up about 49% over the last three months to a recent price of $26.50 per pound, compared with $17.75 per pound last December, a uranium mining executive told the Colorado Mining Association's 119th National Western Mining Conference & Exhibition this week in Denver. There are reasons to think this price jump could be the beginning of a long-awaited recovery in uranium mining, according to Mark Chalmers, chief operating officer for Energy Fuels Resources Incorporated (Lakewood, Colorado).
"Is it acceptable for the U.S. to continue to import nearly 100% of our uranium?" he asked conference attendees. "If not, what do we do about it? Will [President Donald] Trump act to support U.S. uranium production?"
Uranium mining companies spent about 21 years, from 1983 to 2004, in a "coma," where nuclear power was stagnant and uranium demand and production plummeted, Chalmers said February 21. Those two decades also were characterized by extremely high inventories of uranium and limited investment in exploration and project development.
Click on the image at right to see a graphic of uranium prices and production from 1947 to 2016.
Those global conditions eventually gave rise to a uranium "renaissance," from 2005-2013, where nuclear power's growth and an expected increase in uranium demand pushed prices above $40 per pound, Chalmers continued. High levels of production from Kazakhstan were the only reason the global uranium market didn't experience a shortfall of production during this time.
Back then, Chalmers told the CMA attendees, "People would throw money at you if you said you were a uranium mining company."
Chalmers was uncertain whether the period following 2013 is another coma or the calm before the storm. Uranium is a thinly traded commodity compared with other global commodities, like copper, gold or zinc. Prior to their recent surge, uranium prices had fallen sharply since 2013, he noted. The current period has some of the same characteristics as the 21-year "coma" period--namely, very low uranium prices, declining production and limited investment in new projects. Production is not being replaced by exploration, and companies in the nuclear fuel cycle are struggling, Chalmers said.
But in concluding the industry is probably not going into another coma, Chalmers noted global uranium inventories are much lower today than they were during 1983-2004, production is declining and nuclear power is still growing around the world. He estimated 60 to 70 nuclear power plants are under construction worldwide. China is building so many nuclear power plants that that country is expected to become the world's largest consumer of uranium in five or six years, surpassing the U.S., he predicted.
"The U.S. is very vulnerable to a supply disruption, because we import about 94% of the uranium we use, chiefly from Russia, Kazakhstan, Uzbekistan and Niger," Chalmers told the CMA attendees. "U.S. uranium production has fallen off a cliff. There is no new Kazakhstan out there. In fact, that country will be cutting production by 10% this year."
Click the image at right to see a graphic of declining U.S. production of uranium.
Even at current spot prices, Chalmers estimated 75% of new uranium production is uneconomic. New projects need prices to be at least $50 per pound, and probably more like $60 to $70 per pound, to become economic, he estimated.
The current market is "unsustainable," he said, criticizing the U.S. regulatory structure as "insanity" and adding that Australia uses the U.S. nuclear regulatory system as a case study as how not to regulate nuclear power.
Chalmers' company, Energy Fuels, definitely has a dog in the uranium hunt. It is developing uranium mines in several states, including New Mexico, Wyoming, Arizona and Utah. Industrial Info is tracking 10 active Energy Fuels projects valued at $763 million. For the broader U.S. uranium business, Industrial Info is tracking 38 active projects valued at $3.63 billion. Most have been delayed for years, often due to the poor uranium market conditions Calmers discussed.
Energy Fuels has not yet reported full-year financial results for 2016. For the nine-month period ended September 30, 2016, the company reported a net loss of $27.6 million on revenue of $33.7 million. For the comparable year-earlier nine-month period, the company reported revenue of $50.5 million and a net loss of $10.7 million. For more on Energy Fuels, see April 1, 2016, article - Energy Fuels Sees Surge in Global Nuclear Construction, Boosting Uranium Prices.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
"Is it acceptable for the U.S. to continue to import nearly 100% of our uranium?" he asked conference attendees. "If not, what do we do about it? Will [President Donald] Trump act to support U.S. uranium production?"
Uranium mining companies spent about 21 years, from 1983 to 2004, in a "coma," where nuclear power was stagnant and uranium demand and production plummeted, Chalmers said February 21. Those two decades also were characterized by extremely high inventories of uranium and limited investment in exploration and project development.
Click on the image at right to see a graphic of uranium prices and production from 1947 to 2016.Those global conditions eventually gave rise to a uranium "renaissance," from 2005-2013, where nuclear power's growth and an expected increase in uranium demand pushed prices above $40 per pound, Chalmers continued. High levels of production from Kazakhstan were the only reason the global uranium market didn't experience a shortfall of production during this time.
Back then, Chalmers told the CMA attendees, "People would throw money at you if you said you were a uranium mining company."
Chalmers was uncertain whether the period following 2013 is another coma or the calm before the storm. Uranium is a thinly traded commodity compared with other global commodities, like copper, gold or zinc. Prior to their recent surge, uranium prices had fallen sharply since 2013, he noted. The current period has some of the same characteristics as the 21-year "coma" period--namely, very low uranium prices, declining production and limited investment in new projects. Production is not being replaced by exploration, and companies in the nuclear fuel cycle are struggling, Chalmers said.
But in concluding the industry is probably not going into another coma, Chalmers noted global uranium inventories are much lower today than they were during 1983-2004, production is declining and nuclear power is still growing around the world. He estimated 60 to 70 nuclear power plants are under construction worldwide. China is building so many nuclear power plants that that country is expected to become the world's largest consumer of uranium in five or six years, surpassing the U.S., he predicted.
"The U.S. is very vulnerable to a supply disruption, because we import about 94% of the uranium we use, chiefly from Russia, Kazakhstan, Uzbekistan and Niger," Chalmers told the CMA attendees. "U.S. uranium production has fallen off a cliff. There is no new Kazakhstan out there. In fact, that country will be cutting production by 10% this year."
Click the image at right to see a graphic of declining U.S. production of uranium.Even at current spot prices, Chalmers estimated 75% of new uranium production is uneconomic. New projects need prices to be at least $50 per pound, and probably more like $60 to $70 per pound, to become economic, he estimated.
The current market is "unsustainable," he said, criticizing the U.S. regulatory structure as "insanity" and adding that Australia uses the U.S. nuclear regulatory system as a case study as how not to regulate nuclear power.
Chalmers' company, Energy Fuels, definitely has a dog in the uranium hunt. It is developing uranium mines in several states, including New Mexico, Wyoming, Arizona and Utah. Industrial Info is tracking 10 active Energy Fuels projects valued at $763 million. For the broader U.S. uranium business, Industrial Info is tracking 38 active projects valued at $3.63 billion. Most have been delayed for years, often due to the poor uranium market conditions Calmers discussed.
Energy Fuels has not yet reported full-year financial results for 2016. For the nine-month period ended September 30, 2016, the company reported a net loss of $27.6 million on revenue of $33.7 million. For the comparable year-earlier nine-month period, the company reported revenue of $50.5 million and a net loss of $10.7 million. For more on Energy Fuels, see April 1, 2016, article - Energy Fuels Sees Surge in Global Nuclear Construction, Boosting Uranium Prices.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
