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Nuclear Renaissance Has Arrived The long-term fundamentals of the uranium market are very strong. Nuclear energy support continues to grow as global demand for electricity increases. Challenges presented by issues related to security of supply and climate change have resulted in many countries embracing nuclear technology as a source of clean, safe, and reliable electricity. The nuclear renaissance is led by China, Russia and India. Europe, Africa, North and South America are also expanding their reactor fleets. Currently, there are 439 operating units around the world, 36 under construction, 93 under planning, and a further 218 proposed. According to a recent energy study by the International Energy Agency, the world needs to build 1,400 nuclear power plants as part of its goal to halve greenhouse gas emissions by 2050. In 2008, reactor demand is projected to be about 182 million pounds of uranium while the primary production forecast from mining is estimated at 114 to125 million pounds. Secondary sources such as recycled uranium, down-blended highly enriched uranium from dismantled nuclear weapons, and inventories held by the utility companies currently make up deficit. These secondary sources are finite and dwindling. The supply of uranium is underpinned by economic resources that will last for more than 100 years at current consumption rates, making the nuclear renaissance possible in terms of resources availability according to the International Atomic Energy Agency. However, future growth is at a bottleneck due to infrastructural impediments and regulatory approvals. There is a significant difference from uranium ore in the ground and yellowcake in the can. In summary, supply will fall short of demand. While the spot price of uranium continues to display volatility, it represents only 10% of contracting activity in the market. Moreover, the long-term fundamentals of a re-juvenated market should provide a solid foundation for a robust uranium price. The nuclear renaissance has arrived. |
