Fukushima still haunts
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International prices of uranium, the major feedstock in
nuclear reactors, have remained flat; averaging US$53 per
pound as the market struggles to shrug off the effects of
Japan’s nuclear crisis earlier this year.
Market analysts are warning that shrinking order books, a
flat spot price and production cutbacks - largely
attributable to the Fukushima disaster - will haunt uranium
producers well into 2012.
A sluggish US economy and sovereign debt problems in
advanced economies will continue to severely impact the
uranium spot price.
Global uranium stocks have significantly underperformed
during 2011 and analysts attribute this to the diminishing
appetite for nuclear energy after the horror of Fukushima.
“The sector has faced near-term uranium price uncertainty
since the March nuclear crisis in Japan.
“The uranium sector’s performance has also been impacted by
broader global equity market volatility resulting from slow
economic activity and ongoing sovereign debt issues in the
advanced economies,” Australian based Resource Capital
Research (RCR) said in its quarterly market report.
Uranium prices spiked to a record US$138 a pound in 2007
over excitement on the future of nuclear energy, which is
considered one of the cleanest forms of energy.
Before the Japanese nuclear disaster the price was averaging
US$67.75 a pound but after Fukushima it throttled down to
US$60 and has averaged US$53 a pound since.
Namibia, the latest frontier for uranium hunters, has pinned
its future growth on uranium mining as a substitute for
declining diamond production.
Bank of Namibia (BoN) governor Ipumbu Shiimi last week said
mining output declined in 2011, a reflection of the slowdown
in demand for the country’s major minerals such as diamonds,
uranium and zinc among others.
Analysts say the uranium price is largely expected to remain
flat in 2012, and demand will shrunk further if Germany
pushes ahead with its intentions to completely mothball all
its nuclear reactors due to safety concerns. With countries
slowing down their nuclear power growth, the future for
uranium is not as bright as it was in 2007 when talk of
“nuclear renaissance” hogged the commodities market
“The dynamics driving the near-term sector outlook continue
to be dominated by the aftermath of Fukushima, including
Germany’s decision to close reactors and the potential
disposal of surplus utility inventory.
“The spot market has been trading in the range of
US$51-US$53 a pound recently, except for a short breakout in
“Traders indicate that they remain cautious going into the
first half of 2012,” RCR market analysts said.
Most uranium producers sell the product, also known as
yellow cake, on contract prices, which had fallen to
US$62.50 a pound by around November.
The price has shed US$0.50 a month since August this year.
Analysts say that they expect the uranium fundamentals to
improve in the long-term but in the medium-term, the
contract price will hover between US$60 and US$70 a pound,
supporting developmental decisions at a number of advanced
projects such as Extract Resources’ Husab uranium project in
Mirroring the underformance of the uranium mining sector,
French nuclear giant Areva, has over the past three years
pushed forward bringing its Trekkopje uranium project in
The signals of a troubled uranium sector are manifest. On
Tuesday Areva wrote down the performance of its African
mines, including Trekkopje and suspended further
Areva also announced that it would make a 1.6 billion euro
operational loss, cut up to 1 500 jobs in Germany, and has
frozen salary increases for its France-based staff for 2012.
Areva bought Trekkopje in 2007 for US$2.5 billion, a premium
price for a deposit the French nuclear group had hardly
Since then Areva has struggled to transform it into
This week Areva also cut Trekkopje’s uranium reserves to 26
000 tonnes from 45.200 tonnes, a staggering 42 percent
reduction in the estimated ore deposit.
Areva also owns Bakouma Mine in Central African Republic and
Ryst Kuil Mine in South Africa.
Output at Rio Tinto-owned Rossing Uranium in Namibia has
also shrunk to 3 100 tonnes in 2011 from a record 4 147
tonnes in 2009.
Known as the Grand Old Lady of uranium mine, Rossing
operates one of the world’s largest and deepest open pit
Rio Tinto has 69 percent interest in Rossing, which has been
operating since 1976 and ships about seven percent of global
Mid-tier uranium producer, Paladin Energy operates Langer
Heinrich Mine in Namibia.
The spot price of the mineral has suffered since the March
11 earthquake and tsunami that wrecked Tokyo Electric
Power’s Fukushima Dai-Ichi Power Station and triggered the
biggest atomic disaster since Chernobyl in 1986.
The developments prompted some countries to place nuclear
plans on hold.
however says that even with the disaster still fresh, the
long-term fundamentals are still strong.