The way the world produces and consumes uranium is changing. The uranium industry is complex: It is in a state of constant flux, reshaping itself in response to increased competition, globalization, nuclear accidents, and geopolitical concerns. The industry is multinational with a confluence of public and private interests at stake. Frequently, these commercial, economic, and strategic interests overlap or collide.
Excess supply keeps prices low, placing a strain on efforts to bring new mines online in new producer nations such as Malawi and potentially Tanzania and Greenland. Meanwhile, consumption is expected to continue growing in China and India, which may create the type of demand needed to balance the current oversupply and raise prices to the point where production is more profitable.
The uranium market is shifting. The spot price for uranium hovered around US$30 per pound of U3O8 in 2014. That’s down from a high of nearly $150 per pound in 2007, so several mining projects are on hold in both traditional producer nations as well as newer ones. At the same time, some lower cost producers are expanding such as Cigar Lake in Canada and the Husab Proejct in Namibia. The oversupply could last at least another seven years according to one estimate. Low prices led to shutting down production at a mine in Malawi in February 2014 after less than a half dozen years in operation.
The geographies and patterns of uranium production and consumption are also shifting. New producers are entering the scene as traditional consumers are buying less. Right now, states in the European Union (EU) and North America currently consume almost two-thirds of the global uranium output; however, this will change soon as nuclear power projects expand primarily in Asia and Eastern Europe.
China’s consumption levels suggest it is on track to replace the United States as the world’s largest uranium consumer, although the exact date when that will happen is unclear. China’s expansion of nuclear energy also means expansion of its uranium mining interests into Africa, opening up competition in countries that had previously been monopolized.
Meanwhile, the ban on nuclear trade with India recently was lifted, and its exemption from the Nuclear Suppliers Group restrictions adds a very large, new customer. Against this growth, traditional consumers such as Germany and Japan are cutting their usage.
Kazakhstan is the largest uranium producer globally and plans to increase production over the next three years, unlike Australia, which has cut production even though it was the world’s third largest producer in 2013. Australia’s uranium resources are larger than Kazakhstan’s. Russia was the number two uranium producer until the end of 2013 if downblending from military stockpiles is included.
All of these changes, whether on the supply or demand side, present new security and protection challenges.
ONCE MINED, URANIUM HAS TO TRAVEL LONG DISTANCES TO BE CONVERTED BEFORE IT EVEN HITS THE MARKET.