It’s been more than 18 months since an earthquake and tsunami slammed the Fukushima-Daiichi nuclear power plant in Japan, but the following disaster is still washing over the price of uranium.
Uranium prices are holding steady at around the $50-a-pound mark — $48 in mid-September. That’s far shy of its recent high of $137 in 2007, but the price — and higher long-term contract prices — continues to encourage ongoing uranium development in the U.S., including several mine sites and processing facilities in Wyoming.
Still, the spot price of uranium stood at $67.75 per pound before the March 2011 disaster. Other than a short peak in November, the price has stabilized but not recovered.
A slow restart of Japan’s nuclear reactors and closures of reactors there and in Germany are holding the price down, says Resource Capital Research, an Australia-based market research firm, in a uranium sector analysis release in September.
Japan restarted two of its 50 reactors in July and faced protests. Additional reactor restarts are set to take place through 2014.
“Restarts are slower than initially expected, in part because of an increasingly vocal domestic opposition to nuclear power in Japan,” the firm said.
The analysis firm expects the uranium spot price to remain depressed into next year.
Yet the long-term contract price for uranium is about $10 a pound higher, priced at $60.25 on Aug. 31. That price hasn’t wavered more than a couple of dollars up or down for nearly a year, but it’s still below the $73-a-pound pre-Fukushima price.
And the uranium spot price continues its hover, while analysts continue to emphasize the strong mid- and long-term trends for uranium demand, on the strength of new reactor construction in China and India, among other nations.
“Strong growth in nuclear reactors is expected to continue, particularly in Asia, post Fukushima, with Chinese expansion expected to continue to lead the pack,” Resource Capital Research said.
Around the world, 65 nuclear reactors are now under construction, with another 483 either planned or proposed, according to numbers release in September by the World Nuclear Association, an industry trade group.
China remains the heavyweight for new nuclear energy, with 26 reactors under construction and 171 planned or proposed. One reactor is under construction in the U.S., with 26 either planned or proposed.
In terms of the uranium market, the proposed Wyoming projects with permits nearly in-hand or those ready to build may come online just in time.
Resource Capital Research sees a gap in supply opening due to a number of factors, including the 2013 end of a U.S.-Russian program to downblend highly enriched uranium, or HEU , from Russian nuclear weapons into fuel for nuclear power plants.
“There is potential for a supply gap to open up in the uranium market midterm due to declining supply from existing mines, deferral of new mining projects, the anticipated reduction in secondary supply with the termination of HEU at the end of 2013, and ongoing demand growth,” the analysis firm said.
One such deferred mining project is BHP Billiton’s late-August decision to look at other, less-expensive alternatives for its planned expansion of its Olympic Dam project in Australia. The expansion would’ve quadrupled the mine’s output to 40 million pounds in 2017.
“This announced delay will certainly accentuate the coming supply deficit, which has been forecast even if Olympic Dam were to expand” and hit 40 million pounds a year, said Rob Chang and Michael Wichterle of investment bank and research firm Versant Partners Inc., in an Aug. 23 industry update. “This will certainly put upward pressure on the longer term uranium price, and in turn the equities themselves.”
Such a supply gap would likely result in upward pressure on the price of uranium — a heartening sight for current and prospective producers of Wyoming uranium.