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Uranium Week: All Quiet

Weekly Reports | Apr 23 2019

The uranium market went quiet last week ahead of the Easter break, with section 232 still in the balance.

-Unchanged prices
-Nuclear power winning subsidies in the US
-Increased output from Australian producers

By Greg Peel

With the US Department of Commerce’s confidential recommendations regarding section 232 now in the hands of President Trump, who has a little under 90 days to respond, the uranium market has again gone quiet. Notwithstanding last week was a short week.

Limited action in the spot market has left industry consultant TradeTech’s weekly price indicator unchanged at US$25.85/lb.

TradeTech’s term price indicators remain at US$28.00/lb (mid) and US$32.00/lb (long).

Demand

There was encouraging news for the US nuclear power industry last week, which has struggled to remain commercial in the face of cheap gas-fired power and subsidised renewable power. The State of New Jersey voted to allow Zero Emission Certificates for two power plants which provide the state with 90% of its emission-free electricity, amounting to US$300m in subsidies.

In a statement, the operator of the plants, PSEG, said "We are pleased with the decision to award ZECs to PSEG to help support New Jersey's primary supply of zero-carbon electricity. The [Board of Public Utilities] just saved the people of the State hundreds of millions of dollars in what would have been higher energy costs, thousands of jobs lost, and tons of environmentally damaging air emissions”.

New Jersey has now joined New York, Illinois and Connecticut in approving subsidies for the challenged nuclear power industry, with Ohio currently considering such a move.

Non-nuclear power companies in Illinois and New York challenged the granting of subsidies in the US Supreme Court, but the court refused to hear their case. Hence the subsidies stand.

Supply

Rio Tinto produced 1.6mlbs U3O8 in the March quarter – up 5% from the previous March quarter but down -15% on the December quarter.

Energy Resources of Australia ((ERA)), of which Rio Tinto owns two thirds, increased its production from stockpiles by 19% year on year thanks to better mill throughput, grade and recoveries. ERA is not currently mining new ore.

Rio’s Rossing mine in Namibia saw its production fall -6%. Late last year Rio sold 68.2% of Rossing to the China National Uranium Corp at a price dependent of the profitability of the mine between now and 2025. The sale still requires approval from the Namibian Competition Commission.

BHP Group’s ((BHP)) Olympic Dam mine in South Australia increased uranium production in the March quarter by 16% year on year and 19% from the December quarter. Olympic Dam produces uranium as a by-product of copper production, which increased by 22% following smelter maintenance in the prior quarter.

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