Uranium Week: Revived, Not Reviled

Weekly Reports | Oct 17 2017

The Trump Administration is willing to act to support coal-fired and nuclear energy in the face of potential baseload shortfalls.

-Australia and US governments worry about baseload power reliability
-Argentina adding to global demand for uranium
-Low prices forcing AREVA Niger to cut production

By Greg Peel

Australia is currently undergoing an energy crisis. Electricity and gas prices for households and businesses are skyrocketing due to the conflagration of two developments – the ramp-up of LNG export at the expense of domestic gas supply, and the retirement of legacy coal-fired power stations with no desire exhibited by utilities to replace them. The situation is only forecast to deteriorate.

The government is torn along factional lines between a moderate desire to uphold the Paris Agreement while ensuring future energy supply and a push by far right climate change deniers to promote further coal mining and coal-fired power. Public opposition to coal is strong. But the government is struggling to reach a decision on clean energy targets, leaving the private sector unable to sanction expenditure for alternative solutions due to uncertainty.

Occasionally the N-word is spoken, given Australia’s abundance of uranium, but no mention of a nuclear solution has ever been seriously raised.

Australia is not alone. In the US, an abundance of domestic shale gas and, as yet, little LNG export capacity or permission to export has meant coal-fired power generation cannot compete commercially with gas-fired, while despite a low uranium price, legacy nuclear power plants cannot compete with either gas or government-subsidised renewable energy sources. The future of US coal-fired and nuclear power is in limbo.

The biggest fear of the Australian government is the loss of future baseload power capacity in the face of ever increasing power demand. The biggest fear of the US government is also the loss of future baseload power capacity in the face of ever increasing power demand. The US Energy Secretary has proposed swift action to address threats to US grid resilience and to counter subsidies that are benefiting renewables over coal and nuclear.

These resources must be revived, not reviled,” said Secretary Perry.

Demand

Nuclear energy is not an issue in Argentina. The country has an aggressive nuclear expansion plan from an existing base of several reactors, a report by research house Hallgarten & Company notes, public opposition to nuclear power is almost non-existent and Argentina has an energy shortage.

Argentina has been paying significantly more than the spot price to import uranium from Canada and Kazakhstan. The country does have its own sources and several Canadian explorers now have credible mining projects, but the past has seen public opposition to open-pit mining in relation to other metals. The new Mecri regime should be able to lower labour and mining costs.

Supply

In the meantime, Argentina is adding to global uranium demand. On the supply side, AREVA Niger has announced it will cut production next year at its Somair mine and is considering the same for its Cominak mine in the West African Republic, due to low uranium prices.

The spot price was lower again last week, albeit minimally. With both buyers and sellers refusing to give ground, activity was light, industry consultant TradeTech reports, with only four transactions concluded totalling 700,000lbs U3O8 equivalent.

TradeTech’s weekly spot price indicator is down -US5c at US$20.65/lb.

There were no transactions reported last week in uranium term markets. TradeTech’s term price indicators remain as US$24.50/lb (mid) and US$30.00/lb (long).
 

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