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Yellowcake roller coaster: Wyoming uranium miners ride rapid rise and fall in price
Uranium

Yellowcake roller coaster: Wyoming uranium miners ride rapid rise and fall in price

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Lost Creek Uranium

Steel drums of yellowcake uranium await shipping at Ur-Energy's Lost Creek uranium production facility in 2013 in Sweetwater County. 

A brief surge in uranium prices earlier this month offered a glimmer of hope to Wyoming's long-suffering yellowcake miners, but a subsequent plunge illustrated the lingering uncertainty facing the sector. 

The price roller coaster follows a dismal summer for the state's uranium producers, which saw prices plunge below $30 per pound and prompted some companies to lay off employees, mothball expansion programs and consolidate operations. 

Prices rebounded again last week. Spot prices on U-308, the yellowcake uranium used to fuel nuclear power plants, ended Nov. 25 trading at $40.38 per pound.

That was up from the $38 per pound recorded Nov. 21 but down from the high of $44 per pound registered earlier that week. 

Some of the state's uranium firms were taking a cautious approach to the recent price fluctuations, saying they would wait for prices to stabilize before boosting production.

"We’re all sort of in a daze wondering what happened," said Donna Wichers, a Uranium One executive. "I’m thrilled to see it coming back up. I hope it will stabilize."

The company laid off eight employees and reduced production estimates at its Willow Creek in situ mine after prices hit $28 per pound over the summer.  

Others said they sensed a positive turn in a market that has sputtered since Japan witnessed a triple meltdown at the Fukushima Dai-ichi nuclear power plant in 2011. 

Wayne Heili, CEO of Casper-based UR-Energy, said the low cost structure of his company's in situ operation allowed the firm to weather the summer price soaking. Now the company will begin assessing whether to boost production, he said. 

"We’re optimistic. Things are looking better. Definitely," Heili said. 

UR-Energy opened its Lost Creek in situ mine last year. The company has sold uranium from the facility on long-term contracts, where prices generally hover around $50 per pound.

But the company may begin producing for the spot market if prices remain in the $40-per-pound range, he said. 

Lost Creek is currently operating at around 60 percent of its annual 1 million-pound capacity, Heili said. 

The summer's low prices were due, in part, to a pair of producers who continued to flood an already oversupplied market with more uranium, said Rob Chang, an analyst at Cantor Fitzgerald, an investment bank.

But Japan's plans to restart two of its shuttered nuclear reactors, coupled with a buying binge from a collection of utilities, helped lift prices above the $40 threshold in November, he said.

The conclusion of the buying binge produced the drop in price on Nov. 21, though the subsequent rebound suggests that another buyer entered the market, Chang said.

The price fluctuations illustrate the small size of the uranium sector. Uranium is more like real estate, with several buyers engaging one seller, than copper, where the pool of customers is larger, he said. 

"I think the roller coaster ride will continue," Chang said.

Widespread optimism remains over uranium's long-term prospects. Construction of new reactors in China and Russia, along with the revival of Japan's nuclear fleet, means demand will outstrip supply in the long term, analysts and executives said. 

Yet when demand will overtake supply remains a matter of considerable speculation. 

Cameco Corp. closed its Cheyenne office this summer, consolidating its operations in Casper, and eliminated 12 local jobs because of the weak market, said Ken Vaughn, a company spokesman. 

The Canada-based company, the world's largest uranium firm, remains focused on controlling costs, Vaughn said. 

"I think everyone in the market is confident it will improve, but when that happens is an open question," he said. 

Reach energy reporter Benjamin Storrow at 307-335-5344 or benjamin.storrow@trib.com. Follow him on Twitter @bstorrow

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