Uranium in its naturally occurring form consists primarily of two "isotopes" with the same chemical characteristics, but different atomic weights due to the differing number of neutrons in their nuclei. Both isotopes have 92 protons in their nuclei (and, thus, the same chemical characteristics), but the lighter isotope (atomic weight of 235) has 143 neutrons and the heavier isotope has 146 neutrons. The lighter isotope, U-235, comprises only 0.7% of natural uranium, but it is the only isotope that can actually undergo fission and, thus, produce energy. The other isotope, U-238, comprises the remaining 99.3% of natural uranium. In order to be useful as fuel in the most prevalent nuclear power technologies, the percentage of U-235 must be increased to the level of 2-5% U-235, a process called "enrichment". Enrichment is a technically difficult process, whose essence is highly secret because it is the same process used to produce some nuclear weapons material. (Source: TradeTech)
The growing demand for uranium in the world market is based on the superior energy efficiency, in example it is 10k higher than the one of crude oil. Uranium is getting more and more important in respect of nuclear energy worldwide.
Between 2006 - 2015, global mine production from existing and newly discovered ore deposits is forecasted to increase by 77% to 86,400 tons U3O8.with major increases in Canada, Kazakhstan, the Russian Federation and Africa. Global uranium requirements are expected to be met by global uranium mine production and secondary supplies by 2015. Beyond 2015, secondary supplies of uranium are expected to decline further as the US - Russian HEU purchase agreement is not expected to be renewed and supply from a number of other secondary sources will fall. (Source: Intelligence Dynamic Research and analysis)
The Wall Street Access Report "Uranium Supply and Demand the long cycle" generally concludes the following:
1. After a 20-year period of dormancy, reactor orders are on the rise because of nuclear's low operating costs, grid reliability, and zero carbon footprint. Nuclear may be the best new source of power for an electricity-hungry world. We see uranium demand growing by 2.5-3.0% per year between now and 2015. Developing countries, which today account for 15% of global uranium demand will account for 53% of incremental consumption in the period 2006-2020.
2. New uranium mine development was forgotten during uranium's long price drought (1980-2003). That fact, combined with the "arsenal overhang" that resulted when Russia and the U.S. downblended nuclear warheads into utility fuel after the Cold War, gave the nuclear industry no reason to invest in new mines. Now miners are scrambling to keep up with demand. Given time, the supply problem will resolve itself, but that could be 10 years, as new mines are nearly as hard to authorize and build in many places, as are nuclear reactors.
3. Uranium supply (primary and secondary material) could fall short of demand by 14,000 tons per year out to 2012. The gap will be filled by inventory liquidation (enrichment tailings, ore tailings, and strategic stockpiles) and other tactics (perhaps longer refueling cycles) but uranium prices are likely to remain quite high - though very volatile - by historical standards. We believe than uranium yellowcake will trade in the $75-125 per pound level through the next several years, though it could easily spike or sag out of that range at least temporarily.
Several countries, after the first oil shock, started promoting nuclear power to counter the effects of a possible supply shortage of fossil fuels and to reduce their dependence on important energy. During the period of 1992 to 2004, total electricity generated by nuclear power plants increased at an annual average rate of 2,1%. The majority of the increase in nuclear power generation was the result of improved efficiency of existing reactors rather than the establishment of new reactors. (Source: Intelligence Dynamics research & analysis 2007)
In the future, much of the growth in global mine production is expected to occur in countries that are currently significant uranium producers. Countries with reasonably assured uranium reserves are Australia, Kazakhstan, Canada, the United States, South Africa, Namibia, Niger, Brazil, Russia and Ukraine. (Source: Intelligence Dynamics)
The bulk of Canada's uranium resources are located in deposits in the Athabasca Basin in Saskatchewan and the Thelon Basin in Nunavut. Exploration has been focussed in these regions. However, high U3O8 spot prices have also encouraged exploration in provinces such as Quebec, Newfoundland, Labrador, Alberta, Ontario, Manitoba and the Yukon Territory.
Canada's recoverable uranium resources amounted to 444,000 tons as of January 1, 2005, an increase of 3% from the 2004 total of 432,000 tons due to recent discoveries and deposit appraisals exceeding depletion through mining. With over 80% of the resource base categorized as "low-cost", Canada is well positioned to continue its leadership in uranium production.
Canada is the world's largest producer of U3O8 accounting for an estimated 28% of global production. Uranium production in Canada totalled to 11,597 tons in 2004 and producer shipments amounted to 11,545 tons. Canada is one of the biggest uranium producer in the world. The conditions for exploration and production are excellent. The existing infrastructure even for transportation and legal environment are extraordinary good compared to other countries.
According to the Bundesministerium für Wirtschaft und Technologie (BMWI) Germany was importing nearly 50% of its used uranium from Canada (Press release dated 09th February 2006).
Electric utility buyers of uranium, UF6 conversion and SWU often purchase by open bid request, for their specific needs. Such purchases can be either for a "spot" purchase (with typically one delivery within 12 months of the date of the bid request) or for multi-year purchases under a "long-term" contract. Although only a minority share of the utility industry's uranium and enrichment services needs are procured under spot purchases, long-term uranium contracts typically have significant buyer flexibility to buy more or less (typically ±20-30%) than a nominal annual quantity specified in the contract. Therefore it is easy for the utility to shift to more use or less use of the spot market, depending on the then-current spot market price, compared to the delivery price in the long-term contract. Uranium is a scare raw material due to a high demand versus limited production capacity in combination with continuously rising prices. Uranium is not traded at an open market like other commodities. Buyers and sellers negotiate contracts on a private base. Prices are published by independent market consultants as Ux Consulting and TradeTech.
Although there is no formal "market" for uranium and SWU (enriched services), in which standardized sales terms and quantities exist, several organizations publish prices for activity in these markets. The longest running of the uranium price series is the NUEXCO Exchange Value, currently published by TradeTech and in publication since August of 1968 - the beginning of the commercial market for uranium. This uranium price series history is shown in the Figure. The Exchange Value is a measure of the uranium price on the spot market, but is also used in the vast majority of long-term contracts with "market-related" delivery prices. (Source: TradeTech)
The Bundesministerium für Wirtschaft und Technologie has published that the uranium price on the spot market is raised between 2000 and 2005 by 400% (19$/g U3O to 85 §/kg U3O). There is no formal exchange for uranium as there is for other commodities such as gold or oil. Uranium price indicators are developed by a small number of private business organizations, like The Ux Consulting Company, LLC (Ux), that independently monitor uranium market activities, including offers, bids, and transactions. Such price indicators are owned by and proprietary to the business that has developed them. The Ux U3O8 price is one of only two weekly uranium price indicators that are accepted by the uranium industry, as witnessed by their inclusion in most "market price" sales contracts, that covers sales contracts with pricing provisions that call for the future uranium delivery price to be equal to the market price at or around the time of delivery.
The price for uranium was already nine times higher at the end of 2006 compared to 2002 and has nearly doubled so far in 2007. In 2007 the uranium price has gone up from 70$ in January to a high of 135$ in July and is currently at 90$ (End of December 2007).
❚ Uranium Resources and Nuclear Energy
❚ Current market price of uranium
❚ World Uranium deposit maps
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