Uranium Week: Technology Upside For Uranium Miners

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As the uranium spot price falls by -1% for the week, (re)emerging and prospective uranium miners may utilise advances in technology and innovation to remain competitive.

-Can advances in technology circumvent current low prices for emerging producers?
-The in-situ recovery mining method accounts for over 60% of uranium production 
-Uranium spot price falls by -1% for the week

By Mark Woodruff

Given the potential economic and environmental benefits, independent consultant TradeTech explores arguably the most recent successful technology in uranium mining.

The in-situ recovery (ISR) mining method, often lower cost than conventional mining, accounts for over 60% of production today and has contributed to a highly competitive supply environment. 

Such advances in technology and innovation represent a viable path forward for (re)emerging producers at a time when the prevailing uranium market prices remain below the cost of production for many miners.

Through the 1990’s, ISR contributed less than 15% of world uranium production. Then, between 2000 and 2009, contributions almost doubled to 30% of world output.

With conventional operations like Paladin Energy’s ((PDN)) Langer Heinrich mine and Cameco’s McArthur River mine idle, total uranium production derived from ISR is estimated to account for around 62% of global production in 2021.

Potential effect on pricing?

Uranium prices and ISR output are not directly correlated, notes TradeTech. However, since 2009 the increasing proportion of uranium being produced using ISR has occurred in concert with steadily decreasing spot prices. 

Since 2012, ISR has accounted for an average 54% of global uranium production. Over the last eight-or-so years, TradeTech’s Exchange Value has decreased by -40%, to US$31.40/lb in May 2021 from US$52.25/lb in January 2012.

Supply

The dramatic increase in ISR output has been led by Kazakh state-controlled National Atomic Company Kazatomprom. As a result, Kazakhstan became the world’s leading uranium producer in 2013, accounting for approximately 38% of the world’s primary production. By 2020, uranium production in Kazakhstan accounted for 41% of world output.

The growth of scalable extractive technologies in Central Asian nations, combined with favorable foreign exchange rates, means today’s (re)emerging and prospective uranium miners must take action to remain competitive, concludes TradeTech. 

This includes reducing operational risk, incentivising capital investment, improving efficiencies at scale, and optimising production economics. In short, a project’s cost competitiveness must reside among the lowest-cost and reliable producers.

Uranium pricing 

TradeTech’s Weekly Spot Price Indicator is US$32.20/lb, a drop of -US$0.30 from last week. This fall of -1% comes after the price rose nearly 14% over the past eight weeks.

The Indicator has increased almost 6% in 2021, averaging a 0.3% weekly gain, while the average Weekly Spot Price Indicator in 2021 is US$30.05/lb, which is US$0.34 above the 2020 average.

Apart from a lack of firm spot demand, there was news of a US utility entering the market with a term Request for Proposals (RFP) for deliveries beginning as early 2022, which saw a number of competitive offers. As a result, sellers that had previously held firm in their offer prices became more willing to accept lower prices in order to motivate buyers and conclude transactions, reports TradeTech.

Activity in the spot uranium market picked up last week with over 1.5mlbs U3O8 equivalent trading hands, as compared to only 300,000lbs reported in deals closed the prior week.

TradeTech's term price indicators are US$31.50/lb (mid) and US$35.00/lb (long).

Demand remains strong in the mid-term period as buyers step forward to acquire material with delivery beginning as early as 2022, explains TradeTech. Buyers are driven, in part, by the relatively flat prices being offered in the mid-term delivery window when compared to the price increases noted in the spot uranium market. 

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