Long-term improvements forecast for uranium market

Twenty-two new nuclear reactors are scheduled for completion this year, which will require triuranium octoxide, or yellowcake, for operation

NUCLEAR SURGE Twenty-two new nuclear reactors are scheduled for completion this year, which will require triuranium octoxide, or yellowcake, for operation

7th April 2017

By: Robyn Wilkinson

Features Reporter


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Although the international uranium market has been facing tough operating conditions, new demand growth is expected later this year on the back of investment in new nuclear reactors in Russia, China and India, says data insights solutions provider GlobalData mining research director Alok Shukla.

Subsequently, global uranium mine production is projected to increase by 4.8% in 2017 to 67 686.1 t, with new uranium projects coming on stream in Russia, Namibia and the US, he adds. South Africa’s uranium production is also projected to increase by 4.2% in 2017 to 377.7 t, growing substantially at a compound annual growth rate of 45.1% to reach 1 672.1 t by 2020.

Shukla notes that the uranium mining industry currently faces abundant supply and high inventories at utilities in Japan, the US and Europe, which has put downward pressure on prices. Uranium spot prices fell in 2016, averaging $27.7/lb in June – down by 15% from March and 24.7% from June 2015 – and dropping by almost 30% by the end of the year.

Prices are expected to remain low in 2017, which has caused exploration activity to cease, with narrow uranium supply projected over the long term, he notes. However, 22 new nuclear reactors, which will require triuranium octoxide, or yellowcake, are scheduled for completion this year, with a total capacity of 22 444 MW. Eight of these reactors are located in China, four in Japan, two in South Korea and two in Russia.

Accordingly, global uranium mine production is increasing to meet rising demand that is likely to follow as reactors come on stream. Shukla points out that such production was estimated at 64 574 t in 2016 – up 6.7% from 2015 – as a result of production increases of 41% in Namibia, 10.3% in Canada and 6.8% in Australia.

Output from uranium producer Cameco’s Cigar Lake project, in northern Saskatchewan, Canada, rose notably from 2 585.5 t in 2015 to 3 946 t in 2016. Increased output from US-based projects Lance, Nichols Range and White Mesa, owned by uranium producers Peninsula Energy, Uranerz Energy and Energy Fuels respectively; and Cameco’s Inkai mine and national atomic company Kazatomprom’s Budenovakoye mine, both in Kazakhstan, also contributed to global production.

Kazakhstan was the world’s largest producer of uranium in 2016, with production estimated at 24 290 t, or 37.6%, of the world’s total output; followed by Canada, with 14 697 t, or 22.8%; Australia, with 6 057 t, or 9.4%; Niger, with 4 146.1 t, or 6.4%; and Russia, with 3 137 t, or 4.9%.

New projects scheduled to start commercial operations in 2017 include uranium producer Khiagda’s Istochnoye mine, in Russia – which reported uranium reserves of 1 864 t at the end of 2016 – mining company Swakop Uranium’s Husab project, in Namibia – with a capacity of 6 168 t/y – and fully integrated uranium and vanadium producer Energy Fuels’ Canyon mine, in the US.

South African Uranium
South Africa is among the top five countries in the world in terms of uranium reserves, with 322 400 t, or 6%, of known global uranium reserves. However, it is only the eleventh-largest producer, with 362.4 t, or 1%, of global uranium produced as a by-product of gold and copper mining in 2016.

Shukla highlights that South Africa’s electricity sector depends heavily on coal, with State-owned power utility Eskom producing 219 979 GWh of electricity in 2016, with 199 888 GWh, or 91%, produced by coal-fired power plants.

Eskom operates 28 power stations with a combined capacity of 42 810 MW, with 36 441 MW, or 85%, accounted for by coal-fired power plants and only 5.5% generated by nuclear power. Koeberg, near Cape Town, with an installed capacity of 1 800 MW, is the only nuclear power plant operating in South Africa, .

The country’s huge dependency on coal, coupled with sluggish uranium demand and a low commodity price environment, creates a challenge over the short term for the domestic uranium end-use sector, Shukla adds. “However, President Jacob Zuma indicated in his 2016 State of the Nation address that nuclear energy will remain part of the future domestic energy mix. He also mentioned that the country is planning to add 9 600 MW of nuclear energy to the national grid by 2030.”

Whether this will materialise is uncertain, as Shukla also notes that the Department of Energy’s draft Integrated Resource Plan states that, by 2037, government aims to increase nuclear power capacity by only 1 359 MW, owing to low demand and the high cost of nuclear power technology.

“However, a projected increase in demand for nuclear power over the long term as an alternative to coal-fired electricity provides an opportunity for the South African uranium mining industry.”

Thus, while uranium production in South Africa declined in 2016 by 7.8% from that of 2015, mainly as a result of the continuous fall in the uranium spot price and lacklustre demand growth, a rise in long-term production is forecast, supported by several upcoming projects, Shukla explains.

These include uranium producers Peninsula Energy and Mmakau Mining’s joint Karoo project, in the Western Cape, which reported resources of 23.3-million tons with uranium content of 0.1% at the end of 2016. The project, with a capacity of 1 814 t/y, is scheduled to start production in 2019.

In addition, mining company Sibanye Gold’s West Rand tailings retreatment project, in Gauteng, is undergoing a definitive feasibility study, awaiting regulatory approvals and permissions. The project has 2 810 t of pure metal resources and is scheduled to start operations in 2020, with a uranium metal production capacity of 907 t/y.

Peninsula Energy’s greenfield Ryst Kuil project, in the Western Cape, has uranium resources of 18.5-million tons, with uranium content of 0.1%. The project is undergoing a prefeasibility study and has a uranium production capacity of 1.3-million tons.

Edited by Tracy Hancock
Creamer Media Contributing Editor



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