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Uranium Week: Energy Security

Weekly Reports | Aug 29 2017

By Greg Peel

In a quiet week on the uranium spot market, trading continues to bounce back and forward but never quite break away from the US$20/lb level. Four transactions were concluded in the spot market last week, industry consultant TradeTech reports, totalling 400,000lbs U3O8 equivalent. TradeTech's spot price indicator has risen US30c to US$20.20/lb.

Having fallen around -22% over twelve months, the spot price has now been stuck under US$21/lb since mid-May.

No term market transactions were recorded last week. TradeTech's term price indicators remain at US$24.40/lb (mid) and US$32.00/lb (long).

Cheap Gas In The USA

The future of the US nuclear industry is in doubt, and beholden to federal and state governments. Nuclear power cannot compete with gas-fired power on cost, nor with renewable energy enjoying government subsidies. This has led to the planned shutdown of legacy reactors across the country and the abandonment of new reactor builds.

The question is as to whether the US government sees the need to support nuclear energy as part of the mix, given the abundance of cheap shale gas in the country and the ever improving technology of renewable options. What nuclear energy can do is deliver critical baseload power which, to date, has been beyond the capacity of renewable energy.

A review by the US Department of Energy of the US electrical grid, delivered last week, recommends providing pricing advantages for baseload plants to continue operating, and reducing costs for new baseload power and transmission projects. The study confirms what was well understood anyway, that the retirement of both nuclear and coal-fired baseload plants in the country is all down to cheap gas.

An independent report has called for the extension of the production tax credit (PTC) available to new nuclear plants that come on line up to 2020. An extension might just be enough to prevent the complete abandonment of Plant Vogtle in Georgia, which is currently under review by its owners. To date, the House has passed an extension bill but the Senate is yet to review.

The Nuclear Energy Institute has suggested “Extending the PTC not only supports innovation and creates jobs at home,” speaking directly to someone we might know, perhaps, “it helps sustain and strengthen America’s influence abroad”.

Presumably “America’s influence abroad” is a polite way of saying America’s power security vis-a-vis that of any budding new empires.

Paladin Energy

In Australian news, China’s CNNC has elected not to exercise its option to acquire the remaining 75% of Paladin Energy’s ((PDN)) Langer Heinrich mine in Namibia, preferring to remain in joint venture.

Paladin remains in administration pending the restructure of its balance sheet and shares are suspended from trading on the ASX. The company has now extended the administration period, and as to what it will decide to do with Langer Heinrich is as yet unclear.

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