Uranium Week: US Uranium Reserve In Question

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This story features ENERGY RESOURCES OF AUSTRALIA LIMITED.
For more info SHARE ANALYSIS: ERA

The spot uranium price fell incrementally last week for the eighth straight week, as Congress holds up a planned US strategic reserve.

-US House withholds funding for uranium reserve
-Rio Tinto increases production
-U3O8 spot price still drifting down

By Mark Woodruff

Future support for the US uranium sector was challenged this week by a decision by the US House Appropriations Committee to withhold funding for a domestic uranium reserve, as requested by the US Department of Energy (DOE). Due to a lack of detail, the DOE has been requested to resubmit its homework with further information on the justification for the reserve and how it will be implemented.

According to consultant TradeTech, industry sources indicated there was some acknowledgement that the DOE should start preparing for the launch of a US Uranium Reserve and storage program based on current funding.

Uranium pricing

The trend remains down in prices.

TradeTech’s weekly spot price indicator fell -US20c to US$32.70/lb last week. This is now eight weeks in a row of incremental declines. 

The possible termination of the Russian Suspension Agreement (RSA) is causing uncertainty among US utilities. Market participants are hopeful that a resolution may be reached in coming weeks as a result of negotiations between the US Department of Commerce (DOC) and the Russian government.

It has become increasingly difficult for sellers to secure attractive financing rates, due to the volatile economic environment caused by the pandemic, TradeTech reports. As a result, sellers cannot attract buyers as they are unable to offer sufficiently low prices. The sellers are emboldened to seek higher prices by recent cuts to planned production and previously announced project postponements.

The spot price has increased nearly 30% over the last year, while the average weekly uranium spot price for 2020 is US$29.15 per pound, US$3.32/lb above the 2019 average.

TradeTech discloses a total of three transactions were reported for the week, involving approximately 400,000 pounds U3O8 equivalent.

Company News 

Rio Tinto has recorded an increase in uranium production of 6% over the previous quarter from its 86% share in Energy Resources of Australia ((ERA)). ERA’s Ranger operation continued to process existing stockpiles and sold additional material from inventory to capitalise on improved market conditions during the quarter.

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