Weekly Reports | Jul 24 2018
After a prolonged delay, the US Department of Commerce announced last week it will indeed investigate uranium imports into the US.
-DoC to pursue investigation
-Spot volumes lift on the news
-Argentina overlooked
By Greg Peel
The story so far…
Earlier this year two US uranium producers petitioned the US government to consider forcing US nuclear power producers to purchase 25% of their uranium needs from domestic producers, as a matter of national security, but more realistically to head off cheaper foreign imports that were threatening the commercial viability of US production.
At the same time, US nuclear power companies have been shutting down or threatening to shut down legacy reactors, and scrapping plans or threatening to scrap plans for new reactor builds, due to the inability of nuclear power to remain commercially viable in face of cheap gas-fired power and subsidised renewables. Even at a time of historically low uranium prices.
This would presumably sway the Trump administration against mandating domestic uranium purchases, but then “national security” is the underpinning argument for Trump’s global tariff rollout. Clearly both problems cannot be simultaneously solved.
Trump will have the final say when the US Department of Commerce completes its investigation into foreign exports in April next year. Yes, another nine months away. And even then, the president has another long window of time in which to reach a decision.
A cloud of uncertainty will thus continue to hover over the uranium production/consumption sectors, but for now at least one element of uncertainty has been removed, for better or for worse, in that the DoC is actually proceeding.
The result last week was a sharp lift in uranium spot market activity, with nine transactions concluded for a total of 1.7mlbs U3O8 equivalent, industry consultant TradeTech reports. Sellers backed off as the week progressed, sending TradeTech’s weekly spot price indicator up US50c by week’s end to US$23.75/lb.
Two transactions were reported in term markets. TradeTech’s term price indicators remain at US$26.50/lb (mid) and US$28.00/lb (long).
Don’t Cry For Me
The headline players in the global nuclear sector are currently China (reactor builds) and Japan (reactor restarts) on the one hand and Europe and South Korea (winding down nuclear power) on the other, along with the US for reasons above. Alongside are India, South Africa and other EMs looking to initiate/increase nuclear capacity.
Little spoken of is Argentina, but research house Hallgarten & Co last week released a report suggesting the South American country could be set to become a major consumer of uranium.
The report outlined several supporting factors.
The country now has an aggressive nuclear expansion campaign underway, from a base of a handful of reactors. Public opposition to nuclear power is minimal – indeed any form of power, given a persistent energy shortage. Uranium supply required for the life of the existing reactors alone is estimated at 16.5mlbs U3O8.
The new Macri regime could lower labour and other mining costs from currently high levels. To date Argentina has been paying significantly more than spot for uranium supplies from Kazakhstan and Canada.
Despite a lack of price incentive in the post-Fukushima years, several Canadian miners have bravely pushed on and now have credible projects in Argentina. Yet the Argentine government is yet to reveal a policy on promoting vertical integration from producing uranium domestically.
And uranium remains cheap.
The implicit suggestion from Hallgarten is “Watch this space”.
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