Uranium Week: Three Week Run

This story features BHP GROUP LIMITED. For more info SHARE ANALYSIS: BHP

By Greg Peel

Australia’s largest diversified miner, BHP Billiton ((BHP)), announced last week the first ore had been extracted from the company’s high-grade underground expansion into the Southern Mining Area of the Olympic Dam site, and the first copper cathode had been produced from its heap leach R&D trials.

Heap leach ore processing is a low-cost option being assessed for Olympic Dam to extract copper, gold, silver and uranium to support BHP’s future growth plans.

While the suggestion is occasionally made, the Australian government has no intention of considering the construction of a nuclear power plant despite the ready availability of uranium in the country, and despite the fact Australia’s legacy coal-fired generators are one by one reaching the ends of their working lives. The government would rather continue to pursue coal-fired options.

On the other side of the world, in more ways than one, the Norwegian government last week announced it will seek to phase out coal-fired power generation by 2030. The country has one new nuclear plant scheduled for start-up in 2018 and construction of another plant could begin in 2019.

Uncertainty continues in the US nuclear power industry, which is very much a state by state proposition. Dominion Energy said this week it would suspend plans to build a third reactor at its North Anna Nuclear Station in Virginia. Meanwhile, the Pennsylvania state parliament has passed a law urging the pursuit of “fiscally responsible policies” to preserve nuclear power in the state. It is in Pennsylvania where Exelon has announced it will prematurely close the infamous Three Mile Island plant unless policies changed.

Spot Uranium

The spot uranium market posted its third consecutive week of gains last week, but it’s hardly anything to get excited about, so incremental have the price rises been. Last week saw a US40c increase to US$20.65/lb.

Buyers were relatively keen early in the week but interest faded by the end of the week as sellers tried to back off their offers, industry consultant TradeTech reports. Only 400,000lbs were traded in five transactions, compared to 1.1mlbs the week before.

The spot price remains -22% below the February high of US$26.50/lb and the average price for 2017 to date of US$22.03/lb is -16% below the 2016 average of US$26.32/lb.

TradeTech’s term price indicators remain at US$24.30/lb (mid) and US$31.00/lb (long).

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms