RE: Uranium outlook2 Mar 2019 13:54
(PART3)
“If utilities begin to worry about the security of future supplies, then excess inventories can quickly be reclassified as strategic, leading to a shift in purchasing strategies. This tipping point is hard to predict, but could occur soon given the rapid decline in uranium output and the difficulty of securing future offtake agreements at current prices.”
Though a long night for uranium producers may be nearly over, there have been many disappointments in the sector since Fukushima. The consensus is that a tipping point will likely arrive when utilities, submarine fleets and medical users of uranium need to consider new long-term contracts to renew supplies.
The recovery in uranium is also partly in response to the need by countries to meet their international obligations to combat climate change by curbing carbon emissions.
“Demand growth will be driven primarily by reactor builds in China and India,” says RBC Capital Markets’ Global Metals and Mining Outlook for Q1 2019. China has 42 operating nuclear reactors, 16 under construction and another 43 planned.
RBC warns though, that, “developed countries [will] likely hold steady – note [the] recent decision by France to push back phase-out plans.” In November, the French government announced it will delay by up to a decade an earlier plan to phase out nuclear, which provides up to 75 per cent of France’s electric power.
Market watchers are looking to smaller producers to ramp up activity as demand rises and Cameco and Kazatomprom remain closed or with reduced production. The Minerals Council of Australia released a report last fall calling for relaxing rules in that country to spur exploration, development and production, and in North America, two producers, Energy Fuels (TSX: EFR) and Ur-Energy (TSX: URE) asked the U.S. Department of Commerce to require that 25 per cent of domestic uranium demand be supplied from U.S. mine production.
It’s still early to expect how fast an uptick in uranium will affect the job market, says Carl Kaufman, senior manager and recruiter at Hays mining, resources, energy and renewables division in Calgary.
“We’re hearing and reading about price increases and strategic moves in the space, which have stoked positive sentiment, however, we’ve yet to see appreciable employment gains. I would have to say there could be light at the end of the tunnel but practically speaking, it could be some time before we see anything that resembles recovery,” Mr. Kaufman says.
Sign In
Follow the stocks
