From under the yoke of the 2011 Fukushima disaster, nuclear energy has found a groundswell of international demand building at a time when international surpluses are dwindling.
However, Australia’s complicated relationship with the heavy element has seen production rates at historical lows.
Global production of uranium has fallen at a time when demand has increased due to heavy losses sustained by Canadian and Kazakh producers.
With prices rising steadily since 2018 to an average of US$28.90 a pound in April, most of the increase took place in the second half of 2018, and remains well above the November 2016 low of US$18/lb.
While the increase in price has taken some of the pressure off uranium suppliers who have been selling output at a loss during the past two years, the large inventories of uranium still held around the world continue to act as a check on the price surge.
As the world’s biggest uranium producers, Kazakhstan and Canada, continue to wind down production levels, while many prospective mines in Africa, as well as other large projects, are put on ice, global nuclear growth has continued all the way through 2018 and into 2019.
Nine new reactors have been connected internationally since 2018, resulting in a 10GW addition of global nuclear energy, with four more reactors in the construction phase that would create about 5GW of additional power.
Minerals Council of Australia (MCA) chief exectutive Tania Constable said that as the world’s largest deposit, uranium is vital to a healthy mining sector in Australia.
She also said that uranium was “a strategic energy commodity for several of our most important trading partners – the United States, China and India, who are seeking reliable supply for zero emissions electricity technologies”.
The United Arab Emirates (UAE) had demonstrated through its recent construction of nuclear power plants that countries can move into nuclear power generation in a 10-year time frame, and about 30 countries such as Morocco, Egypt and South Africa have been building partnerships and exploring the options and possibilities of developing nuclear power programs.
“Nuclear technology is evolving rapidly, including the development of small modular reactors boosted by new designs such as NuScale, which is moving towards regulatory approval in the United States,” Ms Constable said.
“This offers a potential new growth market for uranium worldwide in addition to large plants currently planned and under construction.
“There are new Gen III designs being developed and deployed in China, India, South Korea and the UAE.
“Projects are under construction in the United States, United Kingdom, France and Finland, and these designs involve more passive safety features and controls.”
While the US remains the largest consumer of nuclear energy, China continued to lead the way in nuclear development, adding seven new reactors in 2018 for a total of 46 reactors with another 15 under construction.
In 2018, China alone generated more nuclear power than Australia did from all other sources, and its nuclear generation is growing at twice the rate of all other power sources combined.
Concerns over air pollution from coal-fired power plants provided a strong incentive for China to roll out its aggressive nuclear strategy.
The superpower was progressing toward a nuclear ‘closed cycle’: a technology that allowed for spent reactor fuel to be re-used and recycled, rather than discarded as waste, and was offering the technology as an export commodity to countries considering nuclear development.
“Closing the nuclear cycle involves reprocessing spent nuclear fuel from light-water reactors (LWRs) and re-using reprocessed materials to extract more energy,” Ms Constable said.
“Closed cycle reactor designs seek to burn the long-lived actinides forming part of the spent fuel, so that fission products are the only high-level waste (with shorter high radioactive lifespans).
“Closed cycle designs in general achieve far more energy for a given amount of uranium.”
In the US, bipartisan legislation has been approved to modernise nuclear regulations, cap reactor fees, and to establish a licencing framework for next-generation reactors.
The country had also completed upgrades at many significant reactors, with 92 nuclear plants having their operations extended to 60 years.
And with the completion of capital spending associated with the upgrades, nuclear power in the US has fallen to the lowest prices since 2008.
“The US nuclear fleet accounts for 60 per cent of US low carbon power sources,” Ms Constable said.
“The legislation validates one of nuclear energy’s great advantages – current plants can be upgraded, maintained and operated cost effectively and safely for many decades, well beyond their original certified life.”
India confirmed that it would build 21 new plants by 2031, South Korea loaded the first fuel into the Shin Kori unit in February, and Bangladesh has poured the foundational concrete of its first nuclear plant.
The Australian outlook
The Resources and Energy Quarterly March 2019 forecast a sustained recovery to the uranium market as further growth underpinned the first quarter of 2019, with an expected real-terms price increase to about US$40 a pound by 2024.
While there are some new uranium prospects, Australia’s uranium outlook is not so positive.
Declining production rates will only be offset by the benefits of higher prices in the short term.
“Australia’s uranium miners earn valuable export income and generate highly paid, highly skilled jobs, particularly in regional communities,” Ms Constable said.
“However, Australia is missing out on jobs, investment and regional prosperity because of the discriminatory treatment of uranium mining projects.”
As exploration and exports remain at historically low levels, production will ease from 2019-2020 as the Ranger mine winds down production toward closure in 2021.
At the beginning of the year, Ranger was exporting material solely from stockpiles, and the ERA had revised its expected rehabilitation costs from $512 million to $808 million.
A number of deposits, however, were progressing toward production, including Boss Resources’ Honyemoon project, Toro Energy’s Wiluna project in WA, and Vimy’s Mulga Rock project in WA.
Vimy announced that it would invest an additional $3 million for exploration at Alligator River, while also pursuing offtake contracts for output.
Boss resources had revised its estimate, up 30 per cent to a total of 36m lb of uranium; however, although work is ongoing, it is not clear whether these deposits would be producing by 2024.
These new projects will be key to sustaining the uranium market in Australia as a precarious future threatens to dampen the promises of a well-primed bull market.
