For some time the uranium market was in a lull. However, in recent times this has changed with a bullish market predicted for 2021. What does mean for African uranium producers. Will we see them finally bring their assets into production on the back of the resurgence in this commodity?
These were some of the key talking points of a recent Mining Review Africa webinar titled Uranium: A resurgence on the cards? The topic was discussed by a panel of experts comprising Daniel Major, CEO: GoviEx Uranium; Brandon Munro, CEO Bannerman Resources; and Dr Kelvin Kemm, CEO: Stratek.
Kicking off the conversation Major said that Africa is focussed on strongly focused on developing nuclear energy, pointing out that there are currently 13 countries who are seeking accreditation to go nuclear.
“Currently, the continent is reliant on a carbon based energy source but there are a range of uranium projects dotted all over Africa and there can be little doubt that it has the resources to develop nuclear energy,” he stated.
Weighing in on the conversation, Kemm stated that as the world moves away from C02 energy sources, it is turning to wind and solar energy. However, such sources are not as reliable as people are made to believe. “It is a bit chaotic at the moment with regards to wind and solar energy. As such, we find ourselves in a situation with nuclear power as the preferred low carbon energy source.”
Growing demand outweighs supply
Regarding the current status quo of the uranium market, Major explained that the sector is turning the corner from a bad market brought on by the Fukushima disaster.
“We saw a significant collapse in demand, however, demand for uranium is now back to levels before Fukushima. This has been driven primarily by the construction of nuclear reactors on the Asian continent. Also, governments are now realising that it is important to have a mixed energy spread which includes nuclear energy,” he stated.
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Meanwhile, Munro added that while the current price of Uranium is US$30 per pound, this is a far cry from peak prices of $136 per pound prior to the Fukishima disaster in 2011. “Where we are today is in the early stages of recovery in a bear market that has seen uranium prices decline to as low as $18 per pound in 2017.
“In terms of a price forecast for the future, it is important to remember that is difficult to forecast short term because there are a lot of different factors that can affect the price. However, in the medium to long term, you can apply macroeconomics in a much more assured way.
“This is because in this sector there is very visible production of uranium which is controlled by the International Atomic Energy Association and this information is available to the entire world. Equally, uranium’s primary use is to power energy plants. This means that you can accurately predict what the demand for uranium will be based on the number of reactors there are,” he explained.
Taking this into account, Munro stated that the amount of uranium being produced currently cannot keep up with the demand for the mineral and that this situation will continue for several years; in fact, it may even get worse. Even more concerning is that Munro pointed out that the situation will be exacerbated because of the depletion of stock of some of the largest uranium producers in the world. In fact, four of the top ten uranium mines will close down this decade.
Given Munro’s explanation, there can be little doubt that there is a need for new uranium projects to come on board. However, he alluded to the fact that the price would have to go up significantly for it to be an incentive to start or advance new projects, suggesting a price of higher than $60 as an enticing figure for uranium producers.
There can be little doubt that the Fukushima accident had a major impact on the uranium market. However, Kemm believes that this is also down to misinformation about the effect of radioactivity and perceived risks associated with nuclear waste. “There are all sorts of things that have put the brakes on nuclear power because of public fear and this also cast doubt among politicians as well as investors.
Now, with the evidence coming out that wind and solar is not the best energy options, people are now having a rethink and over the last year or two, there has been much more positive sentiment around nuclear power. This bodes well for the advancement of uranium projects.”
Adding to the positive sentiment, Munro added that there is definitely there has definitely been a resurgence in the uranium sector. “A lot has changed in the last 12 months to such an extent that we are now on the cusp of a nuclear renaissance. So, is a resurgence on the cards? We have already drawn the cards and they say ‘nuclear’ and ‘uranium’,” he concludes.