PERTH (miningweekly.com) – While the long-term fundamentals for uranium remained sound, advisory firm Argonaut has warned that the post-Fukushima recovery could be slower than previously anticipated.
Argonaut metals and mining research analyst Matthew Keane said on Wednesday that the longer-than-expected recovery meant that there was a bigger focus on exploration companies, which have less exposure to the near-term uranium price.
Keane pointed out that uranium explorers had benefitted from the slow recovery over the past 12 months, outperforming their development and producing peers.
“We have a surplus of inventory in uranium but the fundamentals of the large growth programme in terms of the reactors being built globally means that there is a point when the inventory will be eroded, and we can expect a recovery,” he told delegates at the tenth annual Australian Uranium Conference, in Perth, on Wednesday.
“It is about being poised and ready for such a recovery.”
Keane said that the recovery of the uranium market would likely be triggered by Japan’s restart of its nuclear reactor industry, which was halted after an earthquake and tsunami hit the Fukushima Daiichi plant in March 2011, leading to the worst nuclear disaster since the 1986 Chernobyl accident.
A southern Japan nuclear power plant this week cleared its initial safety hurdle, making it potentially the first nuclear facility to restart in that country after the 2011 disaster. Japan took its 48 remaining reactors offline for safety checks and repairs after the 2011 nuclear meltdown.
Keane said that the acceleration of China’s reactor build programme would also assist in the market recovery, with the country under pressure to clear up its environmental act.
The declining uranium supply to the market would also be a driving factor in the price recovery, as several projects were placed on care and maintenance, and output was lowered from others. Keane added that the geographical positioning of the projects also factored into the price recovery, with some 55% of current production sourced from ‘high-risk’ areas.