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Uranium Week: The Benefit Of Extending Usage of Nuclear Plants

Weekly Reports | Feb 03 2021

As the weekly uranium spot price continues to move in a tight range, new research explores the effect of delaying nuclear plant closures on global uranium demand.

-The effect on uranium demand of delaying plant closures 
-Fourth quarter results for Kazatomprom
-Uranium spot price falls marginally

By Mark Woodruff

In the wake of President Biden’s inclusion of nuclear in his clean energy plan, new research from  Bank of America (BofA) poses the question "what if expected US nuclear plant retirements over the next 10 years were postponed?"

If expected closures in the period 2021-2030 were delayed to beyond 2030, then there would be "an additional 26mlbs of global uranium (U3O8) demand over that period."

While this is just a 2% increase, it is of assistance and could lead to increased pressure on utilities to move forward new contracting, notes the analyst.

In the US there are twelve nuclear reactors expected to shut down between 2021 and 2030. Together, they account for more than 10,000MW of electrical generating capacity and approximately 4.5mlbs of annual uranium demand, or just under 3% of estimated 2021 global reactor requirements. Five are currently expected to close in 2021, all earlier than required by the operating licenses.

The BofA report follows President Biden signing a raft of executive actions addressing climate change, several of which have the potential to directly benefit existing US nuclear generation and US competitiveness in the small modular reactor (SMR) and advanced reactor industry. 

These measures included incorporating climate ambitions into foreign policy, climate financing measures and a National Intelligence Estimate on the security implications of climate change. In addition, they included the role of carbon-free electricity in stimulating the administration's Build Back Better recovery plan, and the introduction of scientific integrity and evidence-based policymaking.

In subsequent news out of Japan directly related to the above research, the mayor of the town of Takahama in Fukui Prefecture granted permission for the restart of two nuclear reactors at Kansai Electric Power Company’s Takahama Nuclear Power Plant.

The first of February announcement is significant as the mayor becomes the first local leader in the nation to approve use of nuclear reactors that are more than 40 years old.

“The use of nuclear power is indispensable for the stable supply of electricity, and the government’s role is to move things forward in that regard,” noted industry minister Kajiyama.

Country News

In the UK, the French multinational electric utility company EDF has reported another revised schedule and budget for the Hinkley PointC Nuclear PowerPoint project, industry consultant TradeTech reports. The project aims to construct a nuclear power station with two evolutionary power reactors (EPR) in Somerset.

The initial operation of Unit 1 is now expected in June 2026, a six month delay. Moreover, delays related to the pandemic will also increase the cost of the project by US$684m. The project completion costs are now estimated at US$30.1-31.5bn.

The Canadian Nuclear Association (CNA) and the European Atomic Forum (FORATOM) have signed a Memorandum of Understanding (MoU) to collaborate in nuclear and promote clean, innovative, and advanced nuclear technologies. This agreement will strengthen both associations’ efforts in advancing nuclear energy’s development, application, and deployment to meet climate change goals, according to a joint statement on January 27.

The MoU addresses the need for greater dialogue and exploration of nuclear’s role in effective environmental stewardship. In particular, it advocates for more explicit and prominent inclusion of nuclear energy in Europe and Canada’s energy and environmental policies.

Company News

Kazatomprom, the world’s largest producer and seller of natural uranium, released a fourth quarter operations and trading update February 1.

All 2020 production and sales figures were just below the top end of revised guidance and the company intends to sell a similar quantity of uranium in 2021 as in 2020.

The company issued an update stating “Kazatomprom is monitoring the situation at KATCO, Karatau and at all other operations, and will continue to follow national and regional covid-19 developments, restrictions, and governmental directives, to ensure that any required actions to reduce the spread and/or impact of the pandemic are implemented without delay. “

Uranium Pricing- During the week

TradeTech's Weekly Spot Price Indicator is US$29.75/lb, down -US$0.05/lb from last week. The indicator continues to trade in a very narrow band on limited transactional activity. 

The Spot Price Indicator has declined over -4% in 2021 while spot price volatility continues to decline on limited market activity. The average weekly spot price in 2021 is US$30.11/lb, US$0.40/lb above the 2020 average.

Just under 500,000lbs U3O8 was traded in the spot uranium market last week.

In the term uranium market, one non-US utility is now evaluating offers received on January 22 for 1.4mlbs U3O8 to be delivered between 2023 and 2028, with optional quantities for additional years.

Meanwhile, a number of non-US utilities continue to evaluate or actively seek offers for material in the mid-term and long-term delivery windows. These utilities are pursuing both formal and "off-market" discussions with potential sellers, reports TradeTech.

Sellers and buyers alike are monitoring the potential for covid-19 to affect future production levels. Sellers in particular are cautioning that uranium production is in a tenuous position. This comes after announced production shutdowns, curtailments and renewed hope surrounding nuclear energy policy.

The sellers warn that the market must keep a close eye on the capability of producers to respond as needed in a timely fashion and at a reasonable cost. 

TradeTech explains this is in the event of any additional disruption or curtailment to existing production. This has been underscored by the recent news of covid contagion for Kazatomprom at its Kazakh-French Joint Venture operating in the Turkestan region of Kazakhstan.

Uranium Pricing-During the month 

TradeTech's monthly spot price for January 31 is US$29.75/lb. This is down -US$0.65 from the December 31 Exchange Value.

The monthly uranium spot price indicator has declined -2.1% so far in 2020. The average Exchange Value for 2020 was US$30.15/lb.

Spot uranium market activity has been especially muted as 2021 begins, reports TradeTech, with a total of 20 transactions involving approximately 2.6mlbs U3O8 equivalent recorded for the month of January. 

TradeTech's term price indicators have faeeln to US$33.75/lb (mid) from US$34.00/lb and US$36.00/lb (long) from US$37.00/lb.

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