Weekly Reports | Jan 28 2020
The uranium market is again in stasis as several lingering issues provide for collective uncertainty.
-No response yet to White House Working Group recommendations
-No indication regarding Iran sanction waiver expiries
-No interest from buyers
By Greg Peel
The global uranium industry has begun 2020 with the same issue besetting it in 2019 – uncertainty.
It was two years ago this month two US uranium miners petitioned the US government to force US nuclear power generators to buy 25% of their uranium requirements from US miners which otherwise buy cheaper imports from the likes of Russia et al. The response from the White House was ultimately to set up a Working Group to examine the entire US nuclear fuel cycle.
Clearly appreciating that forcing an already uncompetitive US nuclear power industry to prop up an uncompetitive US uranium mining industry was not a viable solution, the Working Group recommended the US government, specifically the Department of Defense, instead buy uranium from US miners to build strategic stockpiles, thus satisfying the "national security" concern.
It is presumed the price the US government would have to pay would not only exceed that of cheaper imports, but be sufficient to keep the US uranium mining industry afloat, providing for shuttered or new production to come on line.
President Trump is yet to respond to the Working Group's recommendations, and no deadline has been set for him to do so.
In 2019, the US had placed sanctions on Iran intended to prevent Iran from developing nuclear weapons. Waivers were nevertheless provided for those companies, US or otherwise, assisting Iran with the development of nuclear power generation. Those waivers are set to expire on January 31.
As yet there is no indication as to whether they will expire or be extended. In the interim, tensions between the US and Iran have clearly escalated. Iran wants to renegotiate, but only if the sanctions are lifted, which Trump has refused to do.
Congress is split on whether or not the waivers should be extended. One the one hand, some members are pushing hard for expiry – taking the toughest possible stance on Iran – while others point out that having allied eyes inside Iran's nuclear power industry is the safest way to monitor what Tehran is up to, hence the waivers should be extended.
No indication as yet. A decision will have a flow-on effect to US imports of uranium from Russia and others, thus impacting uranium prices.
And speaking of Russia, there is also uncertainty relating to the US Russia Suspension Agreement, which the US Department of Commerce has until December this year to review.
But wait, there's more.
Following on from the US Working Group, Congress has directed the US Department of Energy's Office of Nuclear Energy to initiate a study to identify key challenges in reconstituting uranium mining and conversion capabilities in the US.
It is in this climate nuclear power generators, US or otherwise, have to make decisions about locking in term delivery contracts for a decade or more, thereby locking in a price. As one might understand, they are currently reluctant to do so until a clearer picture emerges.
Industry consultant TradeTech reported all of one sole transaction in the uranium spot market last week, for 100,000lbs U3O8 equivalent.
TradeTech's weekly spot price indicator has fallen -US5c to US$24.45/lb.
There were no transactions reported in term markets.
TradeTech's term price indicators remain at US$29.00/lb (mid) and US$33.00/lb (long).
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