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Uranium Week: Buyers’ Market

Weekly Reports | May 28 2019

Sellers continue to chase down ever more empowered buyers in an ongoing weak uranium market.

-Uranium spot price continues to fall
-Rio Tinto may shut down Rossing
-US production falls dramatically

By Greg Peel

It was Groundhog Week last week in the uranium market. With utilities largely out of the market pending a section 232 decision, sellers continue to lower prices in order to flush out buying interest.

And the buyers are not making it easy. Having the upper hand, they are not simply insisting on lower prices, industry consultant TradeTech reports, but on specific origins, delivery locations and other restrictive terms and conditions.

Four transactions totalling 500,000lbs U3O8 equivalent were recorded in the spot market last week. TradeTech’s weekly spot price indicator has fallen -US20c to US$24.30/lb.

The spot price has now fallen -16% in 2019, whittling a 12-month gain down to 6%.

There were no transactions reported in uranium term markets. TradeTech’s term price indicators remain at US$28.50/lb (mid) and US$32.00/lb (long).

Supply Response

Australian-listed diversified miner Rio Tinto ((RIO)) has announced it will advance the closure of its 69% owned Rossing uranium mine in Namibia to June 2020 if the Namibian competition regulator blocks the US$104m sale of the mine to China National Uranium Corp.

Rio cannot continue to operate the loss-making business and would rather cease operations ahead of a forecast 2025 mine life if the sale is rejected.

The Namibian government owns a 3% stake in Rossing but 51% of the voting rights. The Iranian Foreign Investment Co holds 15% and the Industrial Development Corp of South Africa owns 10%.

Persistently low uranium prices continue to impact on global supply. Last week the US Energy Information Agency reported US uranium mines produced 700,000lbs U3O8 in 2018, down -37% from 2017.

Total shipment of uranium concentrate from US mills fell -35%. US producers sold 1.5mlbs of concentrate at an average price of US$32.51/lb.

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