The signals of a troubled uranium sector are manifest. On Tuesday Areva wrote down the performance of its African mines, including Trekkopje and suspended further development.
Fukushima still haunts uranium producers, The Southern Times, South Africa, 30 Dec 11 International prices of uranium, the major feedstock in nuclear reactors, have remained flat; averaging US$53 per pound as the market struggles to shrug off the effects of Japan’s nuclear crisis earlier this year.
Market analysts are warning that shrinking order books, a flat spot price and production cutbacks – largely attributable to the Fukushima disaster – will haunt uranium producers well into 2012.
A sluggish US economy and sovereign debt problems in advanced economies will continue to severely impact the uranium spot price. Global uranium stocks have significantly underperformed during 2011 and analysts attribute this to the diminishing appetite for nuclear energy after the horror of Fukushima. “The sector has faced near-term uranium price uncertainty since the March nuclear crisis in Japan.
“The uranium sector’s performance has also been impacted by broader
global equity market volatility resulting from slow economic activity
and ongoing sovereign debt issues in the advanced economies,”
Australian based Resource Capital Research (RCR) said in its quarterly
Analysts say the uranium price is largely expected to remain flat in
2012, and demand will shrunk further if Germany pushes ahead with its
intentions to completely mothball all its nuclear reactors due to
safety concerns. With countries slowing down their nuclear power
growth, the future for uranium is not as bright as it was in 2007 when
talk of “nuclear renaissance” hogged the commodities market limelight.
“The dynamics driving the near-term sector outlook continue to be
dominated by the aftermath of Fukushima, including Germany’s decision
to close reactors and the potential disposal of surplus utility
inventory……. Most uranium producers sell the product, also known
as yellow cake, on contract prices, which had fallen to US$62.50 a
pound by around November.
The price has shed US$0.50 a month since August ….
The signals of a troubled uranium sector are manifest. On Tuesday
Areva wrote down the performance of its African mines, including
Trekkopje and suspended further development.
Areva also announced that it would make a 1.6 billion euro operational
loss, cut up to 1 500 jobs in Germany, and has frozen salary increases
for its France-based staff for 2012.
Areva bought Trekkopje in 2007 for US$2.5 billion, a premium price for
a deposit the French nuclear group had hardly studied.
Since then Areva has struggled to transform it into commercial
production. This week Areva also cut Trekkopje’s uranium reserves to
26 000 tonnes from 45.200 tonnes, a staggering 42 percent reduction in
the estimated ore deposit.
Areva also owns Bakouma Mine in Central African Republic and Ryst Kuil
Mine in South Africa.
Output at Rio Tinto-owned Rossing Uranium in Namibia has also shrunk
to 3 100 tonnes in 2011 from a record 4 147 tonnes in 2009…
Rio Tinto has 69 percent interest in Rossing, which has been operating
since 1976 and ships about seven percent of global uranium supplies.
Mid-tier uranium producer, Paladin Energy operates Langer Heinrich
Mine in Namibia.
The spot price of the mineral has suffered since the March 11
earthquake and tsunami that wrecked Tokyo Electric Power’s Fukushima
Dai-Ichi Power Station and triggered the biggest atomic disaster since
Chernobyl in 1986.
The developments prompted some countries to place nuclear plans on hold.