Nuclear Reactors 408 - Turbulent Market For Uranium Production
Most nuclear fission power plants use enriched uranium for fuel. Natural uranium is common but it only has about seven tenths of a percent of U-235 which is the isotope needed for nuclear power reactors. There are a few reactors that burn a combination of uranium and plutonium. There are reactors that can burn nuclear waste as a fuel. Breeder reactors can actually produce more fissionable materials than they consume and those reaction products can be used as fuel for other reactors. There have been efforts for decades to develop fission reactors that could burn the element thorium which is also quite common. While there are several options for fueling nuclear power reactors, uranium ore is still the major source for nuclear fuel.
The world production of uranium has fluctuated in the past few years as the demand and price have gone up and down because of issues in the nuclear industry such as the Fukushima nuclear disaster in Japan in 2011, cheap natural gas and oil and reduced demand for electricity.
The period from 1987 to 2007 has been called the "coma" years for uranium production characterized by low prices, stagnant demand and big stockpiles. The next ten years saw a "renaissance" for the uranium market when prices stayed at thirty dollars a pound, demand was expected to rise substantially and investors were interested. Since 2014, the market has cooled off again. Investment is down and mines are being closed or mothballed. Unlike the coma years, reactors are being built, current demand is rising and estimates for future demand are rising. Stockpiles are declining and no new exploration is being carried out.
The shutdown of all fifty of Japan's nuclear reactors following the Fukushima disaster was the biggest hit the uranium market took recently. Germany's decision to close all it nuclear power plants also had an impact. And, the recent and planned closure of non-competitive nuclear power plants in the U.S. has hurt uranium sales.
Unfortunately, current production cannot be maintained at the present price for uranium. Many long term contracts for uranium are running out in 2017 and 2018. It appears that many operating mines will close in the next few years. The market demand may be rising but it takes from five to ten years to get a new mine up and operating. This means that uranium production will probably fall behind demand in the coming decade. Unless the price of uranium can rise to fifty dollars a pound production will continue to lag demand significantly.
Analysts say that the near term market will be difficult for producers. The softening of the market for uranium and the big stockpiles have put the buyers in the driver's seat. The way in which long term contracts are negotiated has changed and not to the benefit of the producers.
The market for uranium will continue to be volatile and uncertain in the near terms. Lower production of nuclear fuel in the face of rising demand will also make investment in new nuclear power plants less attractive since price increases for fuel will make new plants less competitive in the energy market.
McArthur River Mine in Canada is the world's biggest uranium mine:
