Fast expanding nuclear fuel producer Uranium One CEO Neal Froneman "does not see any reason why the uranium price will not" scale new peaks in the next year to 18 months, as various difficulties hold back production across the globe, he said on Thursday.

One production hurdle was the current shortage of sulphuric acid, used in uranium extraction, which could have an effect on Uranium One's 2008 production, he said in a telephone interview from Toronto.

"There is a global shortage of acid that is looming, and it's going to impact on industries that use acid," Froneman stated.

The price of sulphuric acid had already been on the rise, he pointed out.

"Processes that use acid are going to be impacted [on], their costs of production are going to see significant increases, and this has a lot of implications for marginal producers," Froneman said.

Asked if this would, in turn, have an impact on the uranium price going forward, Froneman was quick to say it would.

"You've already seen the spot price react a little bit, and as you see the market digest the implications of the supply disruption, acid plus other production difficulties are impacting on supply and this is going to drive the price of uranium higher," he said.

The current spot price was $93/lb, Fronemen noted. "I think it will continue to recover and increase quite dramatically."

"In a year to 18 months, I do not see why the price can't be above previous highs of $138/lb."

Acid solutions

Meanwhile, Uranium One's stock had taken a beating from investors over the past month after it released lower production forecasts, owing to start-up problems at its Dominion mine, in South Africa, and sulphuric acid shortages at its Kazak operations.

He said that the glitches at Dominion had largely been overcome, and that the firm had developed a strategy to address the acid shortage.

In the short term, Uranium One and its partner in Kazakhstan, Kazatomprom, were looking at railing the corrosive material from Russia, where he assured Mining Weekly Online there were available sources.

In the medium term, an existing sulphuric acid plant could be upgraded.

In the long term, State-owned Kazatomprom was looking at building a $100-million plant, which would come on line after 2010, and Uranium One was hoping to participate in this project.

Froneman said that its participation in this project would be less than $20-million.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.