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Uranium Week: It’s Not Easy Being Green

Weekly Reports | Feb 12 2019

With a Democrat majority in the House, US energy policy may up for greener scrutiny. But will nuclear be a part?

-US uranium production well down in 2018
-Cameco production well down in 2018
-US uranium market overwhelmed by red tape

By Greg Peel

The US produced 345,425lbs U3O8 equivalent in the December quarter 2018, down -35% on the September quarter and -45% on December 2017. Concentrate production was down -40% year on year and marks the lowest level since 1950, or if recycled material is not counted, the lowest level since the US Energy Information Administration began keeping records in 1949.

Canada’s Cameco reported 2.4mlbs uranium production in the December quarter, down -65% year on year. The miner’s total 2018 production of 9.2mlbs U3O8 equivalent was down -61% on 2017. Cameco nevertheless sold 35.1mlbs in 2018, up 4%, and achieved an average realised price of US$37.01/lb, up 2%.

Producer buying in the uranium spot market was a feature of 2018 and has continued into 2019. Outside of stockpiles, we can presume that given the spot uranium price rose all year and is currently at US$28.90/lb, and Cameco was selling at an average US$37.01/lb, Cameco was active in the spot market and the company’s decision to suspend production at its key McArthur River mine was a sensible one.

That US$28.90 spot price was unchanged last week from the week before on industry consultant TradeTech’s weekly price indicator. Last week volumes dropped back to 800,000lbs in five transactions. Lower volumes are likely a result of uranium buyers and sellers currently being mired in “red tape”, TradeTech suggests.

Apart from the Energy Information Agency currently conducting its annual survey, the US Department of Commerce has moved forward on its section 232 investigation by issuing a wide-ranging and lengthy questionnaire.

When the petition that sparked the investigation was sent to the DOC last year, the Republicans controlled the House. That is no longer the case, and subsequently the Democrats have requested that the two petitioners forward all correspondence with the Trump administration by March 1.

We can see where this is heading.

Going Green

The Democrat representative for New York and the Democrat senator for Massachusetts have together introduced a Green New Deal resolution to Congress for the US to adopt a policy of “clean” and zero-emission energy sources in order to address climate change. The resolution suggests shifting away from fossil fuels and other sources of emissions within ten years.

The resolution also suggests shifting away from nuclear power.

The Nuclear Energy Institute has subsequently pointed out that nuclear operates 24/7 in the US, provides 20% of US electricity generation and 50% of emission-free generation. Any approach to eliminating greenhouse gases requires all clean energies, including nuclear, to work together, the NEI insists.

Former US Secretary of Energy, Ernest Moniz, has suggested zero carbon emissions within ten years may be impossible to achieve.

Meanwhile in Pennsylvania, state lawmakers plan to introduce a bill that would lead to nuclear power being subsidised, as is the case for renewable sources since 2004. The subsidy is needed to save the state’s five nuclear power plants, the clean energy they produce, and the 16,000 technicians they employ, the lawmakers suggest.

The subsidy would be paid by Pennsylvania taxpayers.

A green world is a costly one.

TradeTech’s uranium term price indicators remain unchanged at US$30.00/lb (mid) and US$32.00/lb (long).

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