Uranium Week: Consolidation

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By Greg Peel

Kyushu Electric Power announced last week it would delay the restart of its Sendai unit 1 reactor, thus postponing the long awaited first restart of a Japanese reactor post-Fukushima. However the postponement is only for two weeks, allowing a little more time for the company to complete final checks and shifting the restart schedule into August.

Meanwhile a Japanese government proposal to return the country’s energy mix to 20-22% nuclear generated by 2030 was approved in draft form last week. This represents a reduction from a pre-Fukushima 30%. Japan will seek to increase the contribution of renewable energy in the mix to help cover the balance of fossil fuel requirement.

On the other side of the world, France, too, is looking to increase its level of renewables in its energy mix as part of its ambitious emission reduction targets. However the government is also proposing to address its ageing nuclear reactor fleet by reducing the proportion of the mix provided by nuclear electricity generation.

At 75% of power generation, France’s nuclear balance is the highest in the world. The government is proposing to bring that proportion down to 50% over a decade.

While the global trend appears to be running against uranium producers, the big offset is China, where reactor building is progressing a-pace.

Lower uranium prices have nevertheless begun to drive consolidation within the wider nuclear industry.

US-based Uranium Resources Inc has announced a merger agreement with Anatolia Energy with the aim of becoming a low-cost uranium producer from Anatolia’s Temrezli project in central Turkey. French nuclear group AREVA and French utility Electricite de France will merge their reactor businesses into one group controlled by EDF. Both companies are 80% owned by the French government.

In Australia, Paladin Energy ((PDN)) has agreed to acquire the Carley Bore uranium project in the Carnarvon Basin, Western Australia, from Energia Minerals in a cash and scrip deal. Carely Bore compromises three connected exploration licences located 100km from Paladin’s Manyingee project and will increase the company’s indicated uranium resources by 30%.

A ban on uranium mining was only lifted fairly recently in WA but clearly for Paladin its WA prospects represent longer term plans. With uranium prices still struggling, Paladin’s Kayekeleera mine in Mali remains on care and maintenance and its Langer Heinrich mine in Namibia is struggling to produce sufficient cash flow to service the company’s debt obligations.

Plenty of news about in the uranium world last week but very little action in the market, industry consultant TradeTech reports. Buying interest has all but dried up and sellers are in no rush to drop prices in order to offload material.

That said, TradeTech’s weekly spot price indicator did manage to tick up US50c to US$35.50/lb despite only four transactions being completed in the market last week, representing a mere 400,000lbs of U3O8 equivalent.

There were no transactions reported in the term uranium markets last week. TradeTech’s term price indicators remain unchanged at US$39.00/lb (mid) and US$46.00/lb (long).

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