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Uranium Week: Foreign Policy Limbo

Weekly Reports | Oct 22 2019

The uranium industry is still waiting to find out whether waivers of US sanctions on Iran will be extended beyond next week’s expiry, ensuring activity ground to a halt last week.

-Waivers set to expire October 29
-20% of US nuclear fuel supply at risk
-BHP uranium sales tumble

By Greg Peel

The uranium market remained in a holding pattern last week. The market had waited 90 days for the Trump Working Group report on the US nuclear fuel cycle but the deadline came and went. A 30-day extension has reportedly been granted as the Group further develops its recommendations.

This suggests it was the Working Group which needed an extension, not the Administration needing an extension because the report was due right in the middle of the last US-China trade talks.

Either way, this is one reason for utilities in both the US and elsewhere to hold off on major supply commitments until it is clear what if any restrictions, tariffs, or anything else may be forthcoming.

Another reason for uncertainty is the Russian Suspension Agreement with the US which both parties are currently reviewing ahead of the agreement’s expiry in late 2020.

But for now the primary focus, and source of uncertainty, is the October 29 expiry of the waivers of sanctions on Iran.

When the US dropped out of Obama’s deal with Iran with regard its nuclear program, sanctions were applied but waivers were also granted to those companies already invested in supporting Iran with its nuclear power objectives. If these waivers are not reinstated, sanctions would apply to said companies, jeopardizing some 20% of US nuclear fuel supply, industry consultant TradeTech reports.

The effects of secondary sanctions could reverberate through the global nuclear fuel market by isolating some major suppliers from customers in Western Europe and beyond, TradeTech warns. Should the US levy sanctions on countries providing nuclear fuel products and services to Iran, these restrictions would likely include certain Russian, Chinese, and European companies, thereby disrupting nuclear fuel imports into the US.

It is thus not hard to understand why uranium market participants are currently on the sidelines. Total weekly spot activity last week involved two off-market purchases totalling 200,000lbs U3O8 equivalent. TradeTech’s weekly spot price indicator has fallen -US15c to US$24.85/lb.

The indicator is down almost -14% in 2019 and -10% year on year.

TradeTech’s term price indicators remain at US$27.00/lb (mid) and US$31.00/lb (long).

Can’t give it away

In other news, BHP Group’s ((BHP)) uranium production at its Olympic Dam mine in South Australia – a by-product of copper mining – fell -4% in the September quarter from the June quarter but was up 30% on the September quarter last year.

Sales in the September quarter fell by -45%.

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