Uranium Week: Upcoming Catalysts For Uranium Industry 

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As the weekly uranium spot price oscillates in a tight range, we examine further impetus for the nuclear industry after the US re-joins the Paris climate agreement. 

-Biden rejoins Paris climate agreement 
-Upcoming catalysts to continue momentum for nuclear
-Minor covid disruption for Kazatomprom
-Uranium spot price remains range-bound

Momentum gained by the US nuclear industry during the Trump administration is expected to be maintained after the Biden administration’s commitment to low-carbon energy, assesses industry consultant TradeTech. One of the first executive orders signed on January 20 was for the US to re-join the Paris Climate Agreement.

Upcoming catalysts include a full Senate vote on the American Nuclear Infrastructure Act. This includes an annual program for a US Strategic Uranium Reserve, which would provide assurance of the availability of uranium recovered in the US, in the event of a market disruption and support strategic fuel cycle capabilities within the nation.

In addition, plans were outlined in the US Department of Energy Office of Nuclear Energy’s “Strategic Vision” in early January. These include goals to address key challenges in the US nuclear sector and pursue first-of-their-kind projects.

During his campaign, President Biden’s political platform proposed a US$2 trillion climate plan that includes nuclear power. In particular, the plan calls for development of small modular reactors, which are suitable for load-following or as a backup for wind power. 

It also supports “leveraging the carbon-pollution free energy provided by existing sources like nuclear and hydropower.”  The US nuclear industry is hoping that this bipartisan support extends to measures at State and Federal level to assist reactors that are at risk of closure. The Biden administration’s first major policy test will be at Exelon’s Byron and Dresden nuclear power plants in Illinois, both of which will be closed in late 2021 unless government support is forthcoming.

In addition, the Biden climate plan outlines the creation of an Advanced Research Projects Agency on Climate to target affordable, innovative technologies to help the US achieve a 100% clean energy target that includes advanced reactors that are applicable to a wider range of applications than conventional nuclear reactors.

Company News

Last week, JSC National Atomic Company Kazatomprom and its French joint venture partner, Orano Mining, reported a covid-19 outbreak at uranium miner Joint Venture KATCO LLC, which operates in the Turkestan region of Kazakhstan.

After initially reporting on 20 January that “several” positive cases had been identified, Kazatomprom stated on 22 January that 666 employees and contractors at KATCO's Moinkum and Tortkuduk operations were tested for covid-19, and the final reports showed 128 positive cases.

As a result, personnel who tested positive were isolated and are receiving treatment if required, and contact tracing was completed to quarantine exposed individuals. 

Several non-core site activities have been suspended. Kazatomprom stated that the current situation will not have a significant impact on its planned 2021 annual production volumes. This will be welcome news for Orano in particular, given its supply from Cameco's Cigar Lake is suspended and its Cominak operations in Niger will close in March 2021.

Global miner BHP Group ((BHP)) reported uranium production of 2.08mlbs U3O8 for the second quarter, unchanged from the same period a year ago and up 8% from the previous quarter. Uranium is produced as a by-product at the company’s Olympic Dam operation in South Australia.

ASX-listed uranium developer Bannerman Resources ((BMN)) has advised that it has been included in the Index Composition for the Global X Uranium ETF (NYSE:URA).

Bannerman CEO Brandon Munro stated, “Inclusion in the Global X Uranium ETF is an important step forward for Bannerman as interest in the asymmetrical uranium macro grows amongst generalist investors and Bannerman gains recognition for the value enhancements from our recently announced Etango-8 Uranium Project in Namibia."

The Global X Uranium ETF provides investors access to a broad range of companies involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries.  

The rules that govern the Index composition were changed in August 2020 to increase the ETF’s exposure to “pure-play” uranium companies from 50% to 70%. The fund has since attracted a substantial inflow of funds. The current assets under have management grown to more than US$270 million.

Uranium Pricing

TradeTech's Weekly Spot Price Indicator is US$29.80/lb, down -US$0.40/lb from last week. The indicator has shown little volatility for several months and has gravitated around the US$30/lb mark since August 2020.

The average weekly spot price in 2021 is US$30.20/lb, US$0.49/lb above the 2020 average.

A total of four spot market transactions are reported for the week, which involved almost 500,000 pounds U3O8.

TradeTech's term price indicators are US$34/lb (mid) and US$37.00/lb (long). 

The term uranium market remained quiet this week, with no new demand or transactions reported. US utilities continue to sit on the sidelines as they monitor market developments and evaluate their procurement strategies for 2021. 

Many of the utilities in the US that postponed buying decisions due to a variety of legislative and trade issues in 2020 are expected to move into the term market over the course of the coming year. This is as US energy policy and that of individual states become clearer, explains TradeTech.

Sellers point to the potential for ongoing risk from covid-19 to essential works, along with already announced production shutdowns and curtailments. In addition, there is renewed energy surrounding nuclear energy policy. These are all advanced as reasons for keeping a close eye on the capability of production to respond as needed, in a timely fashion and at a reasonable cost.

This is underscored by the recent news from Kazakhstan, the global leader in uranium production, that it had experienced a -15% drop in 2020 mined output compared to 2019.

As the year progresses, those utilities that have postponed term purchases, due to uncertainties overhanging the market, will eventually be faced with locking in commitments to provide for security of supply, explains TradeTech.

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