Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Analysis And Price Projection Of The Uranium Market

Commodities / Uranium Sep 15, 2014 - 11:34 AM GMT

By: Submissions


Dr. Volkmar Hable writes: I travel a lot for the purpose of identifying new investment opportunities. In that process earlier this year I was offered by the governments of two countries Uranium exploration concessions of outstanding quality and location, and was told that no one would be interested in Uranium in these days.  This caught my attention and we started to investigate.  And sure enough, as a matter of fact, in these days it seems to be extremely easy to pick up Uranium concessions anywhere between Greenland and South-Africa.

The exceptional price decay in Uranium in the past 10 years seems to offer a reasonable explanation. Many Uranium deposits require a minimum price of 45 to 50 USD per pound in order to only operate at breakeven. The current and past price levels simply don’t accommodate the development or exploration of Uranium rich areas.  Low prices are usually caused by low demand. And here is the Uranium “conundrum”, supported by detailed figures (Source: courtesy of the World Nuclear Council). As readers can easily see, by checking the bottom lines of the respective tables, there has been consistently a significant gap between production and a much higher demand. In 2013 production from world Uranium mines supplied about 85% of the requirements of power utilities. This gap so far has been bridged by supply of military Uranium and Plutonium resources, I’ll come to that in a minute.

All mineral commodity markets tend to be cyclical, for example, prices rise and fall substantially over the years. In the Uranium market, however, high prices in the late 1970s gave way to depressed prices in the whole of the period of the 1980s and 1990s, with spot prices below the cost of production for all but the lowest cost mines. In 1996 Uranium spot prices recovered to price levels where many mines could produce above breakeven, but a decline followed again and prices only started to recover strongly from 2003 onward. However, readers should keep in mind that the quoted spot prices apply only to trading and always have represented less than 18% of the entire supply. Most trade is via 5-15 year term contracts with producers selling directly to utility companies.

The reasons for fluctuation in mineral prices relate to demand and perceptions of scarcity. The price cannot indefinitely stay below the cost of production (see below), nor will it remain at very high levels for longer than it takes for new producers to enter the market and anxiety about supply to subside.




About 445 reactors worldwide with combined capacity of over 376 GWe, require some 78,000 tonnes of Uranium oxide concentrate containing 66,000 tonnes of Uranium from mines (or the equivalent from stockpiles or secondary sources) each year.

This includes initial Uranium for new reactors coming online (thus the difference to the table above, which does not include this additional demand for new reactors).

The demand is growing steadily, and at the same time the reactors are being run more productively, with higher capacity factors.

Each GWe of increased new capacity will require about 155 tU/yr of extra mine production routinely, and about 300-450 tU for the first fuel load on start up of the new reactor.

The nuclear fuel consumption is measured in MW days per tonne U, and many utilities are increasing the initial enrichment of their fuel (eg from 3.3 towards 5.0% U235) and then burning it longer or harder to leave only 0.5% U-235 in it (instead of twice this).

Due to the cost structure of nuclear power generation, with high capital and low fuel costs, and the long planning periods, the demand for Uranium fuel is much more predictable than with any other mineral commodity. Once reactors are built, it is very cost-effective to keep them running at high capacity and for utilities to make any adjustments to load trends. Demand forecasts for Uranium therefore depend for the overwhelming part on installed and operable capacity, regardless of economic fluctuations. And it is this point exactly that would make Uranium mining an attractive stable long-term business proposition.

Looking 20 years ahead, the market is expected to grow significantly. The WNA 2013 Global Nuclear Fuel Market Report reference scenario (post Fukushima accident) shows a 49% increase in Uranium demand until 2024 , assuming a 36% increase in reactor capacity.

Electricity demand by 2030 is expected (by the OECD's International Energy Agency, 2008) to double from that of 2004, and it is hard to see how in a world concerned with limiting carbon emissions, and very much limited fossil fuel supplies, this additional demand can be supplied other than by nuclear power generation.


In 2012 mines supplied some 58,344 tU, about 84% of utilities' annual requirements. The balance has been covered by secondary sources including military supplied and  stockpiled Uranium held by utilities. Stockpiles of Uranium at the end of 2013 they were estimated to be at  90,000 tU in Europe and USA, and a bit less in East-Asia. Basically we are looking at stockpiles of a 1.5 to 2 years of annual consumption at current burn rates, which is not too bad.

The perception of imminent scarcity drove the pot price to over USD 130 in 2007 but since then has return back to above the 30 USD level, which is well below the breakeven cost of many mines.

However, the long-term contracts are a different story, and there the prices are well above the spot price. Most long-term contracts and the prices in new contracts have, in the past, reflected a premium of at least 15 to 20 USD above the spot market, and in some cases even higher.

This divergence clearly is unsustainable and most certainly point to higher prices going forward, even without the prospect of an increase in electricity consumption.

The main growth in Uranium demand takes place today in India, Russia and China, and their vertically-integrated sovereign nuclear industries have sought equity in Uranium mines abroad, bypassing the market to a large degree 8which explains the low spot price despite high demand).

Strategic investment in Uranium production is a priority for these sovereign industries.

An important source of nuclear fuel is ex-military weapons-grade plutonium, as MOX fuel. Commitments by the USA and Russia to convert nuclear weapons into fuel for electricity production is known as the Megatons to Megawatts program.

Weapons-grade Uranium and plutonium surplus to military requirements in the USA and Russia is being made available for use as civil fuel. Weapons-grade Uranium is highly enriched, to over 90% U235 (the fissile isotope). Weapons-grade plutonium has over 93% Pu-239 and can be used, like reactor-grade plutonium, in fuel for electricity production. Highly-enriched Uranium from weapons stockpiles has been displacing some 8850 tonnes of U3O8 production from mines each year, and met about 13% to 19% of world reactor requirements through to 2013. It is unclear at this point how much longer the military is willing or able to supply fissile material to cover the short-falls of mine production. There was talk already in 2012 that in 2013 Russia would stop all sales for concerns about keeping enough for its army.

The demand side finishes the bullish picture for Uranium. The main catalyst is the move to green energy. Nuclear power plants have no carbon emissions. The growth of nuclear power is just beginning, but planned production is expected to greatly increase the demand for Uranium.

Westinghouse Electric signed a deal to build four nuclear reactors in eastern China. The price tag on the deal is $8 billion. This is just one tiny piece of the puzzle. China plans to spend approximately $50 billion to build 30 nuclear reactors by 2020. This will increase its nuclear energy production by 40 gigawatts. That’s basically enough power to supply all of Spain with electricity. The growth in the nuclear market has resulted in a very large increase in the demand for Uranium

The production of these mines takes time and money. Even if everything goes well, we are talking about at least six years until a mine becomes operational from initial exploration, and it’s for this reason that there is a long period of time during which demand exceeds supply. This shortage will always show up in price, and that’s exactly what we have and will continue to see.


Based on the above figures I expect a widening gap between supply and demand, which may be covered in part by increased efficiencies of new nuclear reactor plants, which will be exacerbated by the decrease in military supplies to the civilian market, and a s result should cause rising prices in both long-term contracts and spot prices. I expect prices to continue their sideways pattern for some more time. But as the transfer of military supplies to civil use is being reduced and more reactors are coming online we have reason to assume prices beyond the 100 USD mark in the next 5-7 years or so.

About the author:

Dr. Volkmar Hable is a geologist and physicist by training, he holds a Ph.D. in geosciences and a B.Sc. in Agriculture and Agronomics among other, and is fluent in English, French, Spanish, and German. He was CEO CEN-European operations of Fortune 500 company Adecco, manager of a Swiss hedge fund for 7 years and has spent a year in the Diplomatic Corps.  He currently is a member of the in British-Columbia accredited Consular Corps, a director and fund advisor of Samarium Investment  Corporation and  CEO of Samarium Borealis Corporation.

© 2014 Copyright Dr. Volkmar Hable - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in