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"Global Mining Descisions in Your Palms"
Nuclear power has the distinct advantage of being able to provide a reliable amount of base-load power with relatively low greenhouse gas emissions. Does Uranium mining, the silvery radioactive metal have a future considering that even though is a cleaner, reliable source of energy,
it has potentially explosive environmental, worker health and safety impacts against the backdrop of safer and cheaper global energy initiatives?Despite efforts by different pressure groups to move towards other methods on energy generation, it seems Nuclear is still and will still hold its fort for the foreseeable future with even more demand.
After crashing hard for more than 6years following the Fukushima disaster in Japan the Uranium market has bounced back and this time with a thud. According to the World Nuclear Association (WNA), there is increased demand due to global energy security concerns, uncertainty surrounding access to carbon based fuels, greenhouse constraints and ultimately global climate issues. The result will be a huge global shortage of Uranium against the backdrop of dwindling supplies with some of the major uranium mines having scaled down.
However, a series of events, including Japanese utility Tepco’s cancelling of a key uranium supply contract with Cameco Corp. and the U.S. Department of Energy’s decision to cut uranium dispersion into the market, dampened the enthusiasm following Kazakhstan’s announcement to trim production. Kazakhstan, the world largest supplier of Uranium (approximately 40% of global production) scaled down to about 10% only, thus tightening the demand and fueling a lot of optimism amongst prospective players. However, the number of global Nuclear reactors is expected to double by 2030.
Installed nuclear capacity is projected to shift from about 391 gigawatts net, to between about 331GWe (low case) and 568 GWe (high case) by 2035. The low case represents a decrease of about 15% from 2016 nuclear generating capacity, while the high case represents an increase of about 45%. With currently USA policies unpredictable on nuclear energy, its supply base requires more than 90% imports of Uranium to satisfy its needs. Power generation is the single largest use of energy in the United States. In 2016, 39% of all energy used (37.8 quadrillion BTUs) flowed through the USA electric power grid.
The question has never really been whether electricity would eventually dominate the way energy is delivered, but rather how the electricity system would be fueled especially with the move to have electrically powered vehicles. Significant investment and technical expertise is required to bring idled uranium production capacity and resources back into the supply chain in a timely manner, including from mines currently under care and maintenance. Canada’s largest uranium miner, Cameco, has cautioned against investing in new uranium mines, saying that “even the promise” of new supply could create a headwind and put downward pressure on uranium prices.The Canadian-headquartered company, which last year idled its McArthur River/Key Lake operation for an indeterminate duration, argues that much of the supply that has been removed from the market is the result of supply curtailment, not supply destruction. The uranium market has improved significantly in 2018, with spot prices having risen by more than 20% since last year this time. Cameco also states that interest in long-term contracting has returned but adds that prices and contracting opportunities are not where they need to be to restart idled capacity, or to warrant investment in value-adding growth opportunities.
In today’s market environment, it does not make sense to invest in future primary supply. The market has seen significant existing primary supply shutdown and not just by the higher-cost producers. Even the lowest-cost producers are deciding to preserve long-term value by leaving uranium in the ground. Adding to security of supply concerns today are the market access and trade policy issues facing the nuclear industry. These market access and trade policy issues highlight the importance of origin in an industry where almost 90% of primary production comes from countries that consume little-to-no uranium, and 90% of uranium consumption occurs in countries that have little or no primary production.
Furthermore, the issues highlight the fact that nearly 70% of primary production is in the hands of state-owned enterprises, after considering all of the cuts to primary production that have occurred. Our industries are driven by energy and electricity consumption which continues to rise year over year. More than two billion people around the world remain without reliable electricity, a significant tool in improving people’s quality of life. It remains to be seen whether Nuclear energy will take back its place as the future source of clean power.