Uranium: Not if but when – by Lawrence Williams (Mineweb.com – September 12, 2014)

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Speakers at a uranium seminar in London were all in agreement that uranium prices will rise, but only in the medium to long term.

LONDON (MINEWEB) – Presenters at a uranium seminar organised this week by the London branch of Women in Mining, and sponsored by Fission Uranium, from a broad spectrum of the industry were all in agreement that uranium prices would likely rise substantially, but perhaps not yet – only in the medium to long term. And medium to long is just another way of saying ‘jam tomorrow’, although in this case ‘tomorrow’ will undoubtedly come but price rises may not be significant until perhaps the end of the decade.

The opening keynote was given by Ian Hiscock of commodities research group CRU who reckoned that short term price weakness would remain but that demand for uranium would likely double in the next 20 years with growth in usage for nuclear power generation flat to downwards in the West, due to the probably overdone post Fukushima fallout, but very substantial growth occurring in the East, and in particular in China which has a huge nuclear power development programme in place.

Nuclear power arguably offers the only real major scale non polluting, zero carbon emission technology out there and China sees this as a means for reducing its enormous air pollution problems which beset its major cities from its massive coal-fired power generation sector.

The problem for uranium is that because of its association with atomic weaponry many people live in fear of it – a fear exemplified by the three main nuclear power disasters – Three Mile Island in North America in 1979, Chernobyl in the Ukraine in 1986 and most recently Fukushima in Japan in 2011. All had a very significant effect on nuclear power programmes and Fukushima perhaps most of all in this respect prompting huge knee-jerk reactions against nuclear power in particular in Europe. It may take the nuclear power industry in the West many years to recover – if ever.

But, as Hiscock pointed out, the mining of uranium and its use in power generation is, in reality, one of the safest means of producing energy. Far more people will die worldwide as a result of air pollution from fossil fuelled power plants than will have had their lives shortened by the very rare nuclear power plant disasters – and nuclear technology and safety is evolving as lessons are learned from those which have occurred.

But nonetheless uranium prices have just about halved since the Fukushima disaster making many uranium mines uneconomic – indeed most of the industry so were it not for the fact that most uranium is sold under long term contracts many of which are at double the current spot price – or even more.

Hiscock was followed by the impressive Fletcher Newton of New World Consulting who enlightened the audience further on the long term contract position. Nuclear power utilities need to secure their supply base to a far greater extent than fossil fuel power utilities do given the relatively small number of uranium miners and thus need to set contract prices at a level which will guarantee future supplies.

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