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Uranium Week: Nationalise Nuclear Power?

Weekly Reports | Apr 24 2018

As more US nuclear power plants warn of closure in the face of cheap gas-fired power, might the government need to nationalise the industry in the name of energy security?

-White House to consider drastic action
-Little movement in spot prices
-Australian producers report quarterly production


By Greg Peel

Two weeks ago US utility FirstEnergy appealed to the state legislatures of Ohio and Pennsylvania to consider policy decisions that would prevent the closure of the company’s nuclear plants in those states due to an inability to compete with gas-fired power. FirstEnergy also appealed to the US Department of Energy to provide assistance under the Federal Power Act (202), and filed for bankruptcy protection.

The signals from the DoE have since been mixed, given 202 allows the department to order power plants to stay open in times of war or natural disaster. However, the Trump Administration is reported to be considering the implementation of the Defense Production Act, last used in 1950, to keep financially challenged coal-fired and nuclear power plants on line.

Bloomberg reports the White House is investigating how best to implement the policy, which provides the government with sufficient latitude to nationalise private industry in the name of security.

In the meantime, activity in the uranium spot market continues to underwhelm. Industry consultant TradeTech reports four transactions concluded in the week totalling 850,000lbs U3O8 equivalent. Utilities were among the buyers.

There is some interest being shown for deliveries in late 2018 to early 2019, TradeTech reports. The consultant’s weekly spot price indicator has risen US25c to US$20.75/lb.

Term price indicators remain at US$25.50/lb (mid) and US$28.00/lb (long).

Australian Production

Uranium production at BHP’s ((BHP)) Olympic Dam mine in South Australia increased 18% in the March quarter from the same period last year. Material mined increased 48% and ore milled increased 295%, with grades increasing 22%.

On the other hand, sales fell to 1.1mlbs from 1.8mlbs a year ago.

Production at Paladin Energy’s ((PDN)) Langer Heinrich mine in Namibia fell -23% in the quarter. Paladin continues to process long-term stockpiles, having mined no uranium in all of 2017 in line with the company’s production curtailment plan. Ore milled declined -9%, grade -17% and sales -55% at an average of $22.15/lb.

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