Forget About Uranium Market Rebound Until 2019, Rosatom Says

  • Market will take three years to rebalance, producer says
  • Rosatom plans stable uranium ore production through 2019

Uranium miners will have to wait until at least 2019 for prices to rebound enough to start new fields, according to Russia’s Rosatom Corp.

Spot uranium prices fell more than 60 percent since the 2011 Fukushima nuclear disaster led Japan to halt all its reactors, according to data from Ux Consulting Co. While prices may either fall further or rise 15 to 25 percent from current levels until 2019, there won’t be “significant growth,” said Kirill Komarov, first deputy head of the state-owned nuclear company that is the world’s fourth-largest uranium producer.

Uranium mines from Africa to Australia have been closing down or slowing operations as prices slumped after Fukushima. Japanese reactors have restarted at a slower pace than expected and global inventories are “excessive” with the U.S. selling uranium hexafluoride stockpiles into the market until 2018, Komarov said.

“The market re-balancing will most likely stretch for three years,” he said last week in an interview in Moscow. “There are just no global drivers for a sharp price increase now.”

More than 400 reactors worldwide require some 78,000 tons of uranium oxide concentrate, most of which comes from miners, with the remainder from secondary supplies including ex-military material and other inventories. Swaps based on Ux’s monthly index were at $73 a pound a month before Fukushima, and closed at $26.25 on Monday on the New York Mercantile Exchange.

‘Moderately Optimistic’

In three years, there may be “grounds to be moderately optimistic” as new nuclear plants will need more fuel and rising prices should be sufficient to cover spending in new production. “Now it’s all loss-making, ” he said, highlighting the giant Elkon project in eastern Siberia, which hasn’t even been considered for development at current prices despite potential annual capacity of 5,000 metric tons.

Rosatom produced 7,849 tons of uranium last year. Its Russia-based Atomenergoprom JSC unit aims to keep volumes stable at about 3,000 tons in the next three years, the company said last month. Rosatom’s Toronto-headquartered Uranium One Inc. unit, with key mines in Kazakhstan, will produce about 4,800 tons in 2016 and probably similar volumes over the next two years, depending on prices, Komarov said.

In the longer term, demand will grow as “uranium is a far more predictable product than any other energy resource,” Komarov said. More nuclear power units are being built than at any time during the past 25 years, according to the World Nuclear Association.

Before it's here, it's on the Bloomberg Terminal.