Uranium market

The uranium market, like all commodity markets, has a history of volatility, moving with the standard forces of supply and demand as well as geopolitical pressures. It has also evolved particularities of its own in response to the unique nature and use of uranium. Historically, uranium has been mined in countries willing to export, including Australia and Canada. However, countries now responsible for more than 50% of the world’s uranium production include Kazakhstan, Namibia, Niger, and Uzbekistan. Uranium from mining is used almost entirely as fuel for nuclear power plants. Following the 2011 Fukushima nuclear disaster, the global uranium market has remained depressed, with the uranium price falling by more than 50%, declining share values, and reduced profitability for uranium producers since March 2011. As a result, uranium companies worldwide have reduced capacity, closed operations and deferred new production. Before uranium is ready for use as nuclear fuel in reactors, it must undergo a number of intermediary processing steps that are identified as the front end of the nuclear fuel cycle: mining it (either by ISL or by mining and milling into yellowcake); enriching it; and finally fuel fabrication to produce fuel assemblies or bundles.

History

Uranium production is highly concentrated. The world's top uranium producers in 2017, representing 71% of total production, were Kazakhstan (39% of world production), Canada (22%) and Australia (10%). Other major producers included Niger, Namibia and Russia. Initial treatment facilities to produce uranium oxide are almost always located at or near the mining sites. The facilities for enrichment, on the other hand, are found in those countries that produce significant amounts of electricity from nuclear power. Large commercial enrichment plants are in operation in France, Germany, Netherlands, UK, United States, and Russia, with smaller plants elsewhere. Global demand for uranium rose steadily from the end of World War II, largely driven by nuclear weapons procurement programs. In the 1960s, the United States' Energy Agency banned the use of foreign uranium in American reactors, and the country significantly reduced the price of its uranium exports. This resulted in oversupply of uranium in the rest of the world. In June 1972, the major non-United States uranium producers formed a secret cartel to manipulate the market. The cartel (Societe d'Etudes de Recherches d'Uranium) was composed of Australia, France, South Africa, and Anglo-Australian transnational Rio Tinto Zinc Ltd. The cartel sought to mitigate the impacts of US policy on the market by engaging in bid rigging, price fixing, and market sharing. Westinghouse filed an antitrust lawsuit against cartel members in 1976 and the cartel disbanded. In the 1980s and continuing into the 1990s, uranium demand decreased as fewer nuclear power plants were built. Factors for the decreased demand included the end of the Cold War (which in turn resulted in the increased availability of secondary sources of uranium), the disasters at Chernobyl and Three Mile Island. Another factor was the construction of a series of large hydro-electric power stations has also helped to depress the global market since the early 1970s. This phenomenon can be traced back to the construction of the vast Aswan Dam in Egypt. During this time, large uranium inventories accumulated. Until 1985 the Western uranium industry was producing material much faster than nuclear power plants and military programs were consuming it. The spot price for uranium fell, leaving the price below $10 per pound for yellowcake by year-end 1989. With the price of uranium low, investment in uranium mining decreased. The uranium market was a buyers market over the periods 1980 to 1994 and 1998 to 2003. Beginning in 2001, uranium prices rebounded and continued to increase through the uranium bubble of 2007. Factors resulting in this price increase included decreased availability of secondary sources of uranium, a flood at the Cigar Lake Mine in Canada, new reactors beginning operations, and the announcements of China's plans to expand its nuclear power generation. During the mid-2007 uranium bubble, the price of uranium peaked at around US$137/lb, the highest price (adjusted for inflation) in 25 years. Uranium demand and prices decreased during the 2008 financial crisis. Following the shutdown of many nuclear power plants after the Fukushima Daiichi nuclear disaster in 2011, demand fell further to about 60 kilotonnes (130×10^6 lb) per year. In 2012 Kazatomprom and Areva were the top two producing companies (with 15% of the production each), followed by Cameco (14%), ARMZ Uranium Holding (13%) and Rio Tinto (9%). World uranium requirements increased steadily to 65,014 tonnes (140 million pounds) in 2017. Because of the improvements in gas centrifuge technology in the 2000s, replacing former gaseous diffusion plants, cheaper separative work units have enabled the economic production of more enriched uranium from a given amount of natural uranium, by re-enriching tails ultimately leaving a depleted uranium tail of lower enrichment. This has somewhat lowered the demand for natural uranium. Several factors are pushing both industrialized and developing nations to seek alternatives to fossil fuels. The increasing rate of consumption of fossil fuel is a concern for nations lacking in reserves, especially non-OPEC nations, as is the pollution produced by coal and gas-burning power plants. On the other hand, it is still difficult to tap economically into the world's vast solar, wind, and tidal energy reserves. Uranium suppliers hope that these factors will drive an increase in uranium production due to demand for nuclear power generation.

Current market operations

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