Uranium prices give mixed signals

31 August 2018
Paladin Energy, which will put its Langer Heinrich Mine in the Erongo Region on care and maintenance beginning next month, due to low uranium prices, expects the uranium market to undergo a fundamental restructuring in the short to medium term.
The company says the care and maintenance plan will remain in place until the spot price reaches at least US$40 to US$45 per pound.
The spot uranium price was trading at about US$26 per pound this week, down from around US$70 per pound in March 2011, before the Fukushima disaster.
Uranium prices have improved from just under US$20 per pound last year to the current US$26 per pound.
Paladin Energy CEO, Scott Sullivan, said this week that primary production and secondary supply continues to be short of forecast growth in consumption, whilst demand continues to grow in existing and new markets, even as some countries withdraw from nuclear power or reduce the proportion in their energy mix.
Sullivan said some 57 reactors are under construction or are being commissioned with another 152 at the planning stage, with approvals in place.
“Growth in the utilisation of nuclear energy is focussed in Asian and Middle Eastern regions with China, India and Russia leading the argument for stable, reliable, low emissions nuclear energy.”
He said notwithstanding improved uranium market activity in the last quarter, forward price indicators remain well below incentive costs for almost all new primary production, and as such, are unlikely to promote a near-term commitment to new developments.
“Nonetheless, we are confident that a nascent market recovery has commenced and that normalisation of long-term contracting volumes will follow in due course.
“Similarly, although much has been made of inventory overhang in the uranium market, we continue to believe that available inventories are less onerous and drawdown is well advanced,” he said.
The Paladin executive said the placing of the mine on care and maintenance beginning  September,  means the projections for 2018 of 2,7 million pounds of uranium oxide will be 34 percent lower than 2017, mainly as a result of a 16 percent decrease in ore processed and a 22 percent decrease in grade.
“The mine is expected to remain on care and maintenance until the uranium spot price makes it economical to restart on a sustainable basis. During the care and maintenance period, the mine will ensure that the plant is properly maintained for a restart and operating processes will be reviewed for potential optimisation that could result in cost savings once the mine is restarted,” Sullivan said.
Langer Heinrich, which was commissioned in 2008, has a production capacity of five million pounds per annum.
Paladin owns 75 percent of Langer Heinrich through its Namibian subsidiary, Langer Heinrich Uranium Ltd, while CNNC Overseas Uranium Holdings, a unit of China National Nuclear Corporation, owns the remaining 25 percent.


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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