Nuclear Energy’s Limp Causing Uranium Prices to Stumble via Forbes

When the March 2011 earthquake and tsunami knocked out Japan’s Fukushima nuclear reactors, they also took down the price of uranium. The hesitance to resume nuclear operations not only in Japan but also elsewhere in the world has caused the demand for the nuclear feedstock to diminish.

Indeed, uranium prices have fallen from about $68 a ton before the nuclear crisis to $47 a ton as of September 2012, which is the lowest they have been in two years. Analysts had anticipated such a slump but had also said that the rising demand in, especially, Russia, China and India would, again, necessitate the increased development of uranium. Altogether, 95 reactors are planned in the next two decades, says Canada’s Cameco Corp., which adds that 60 are now under construction around the globe.

“Overall, the uranium market conditions continues to be in wait and see mode as utilities are generally well covered for the next few years, and suppliers are similarly heavily committed,” says Cameco, in its quarterly report to shareholders. “However, we have seen the emergence of some long-term contracting over the past few months.”

It’s expected to be a long two or three years before uranium prices pick back up. Earlier this month, Japan’s government said that it would end its use of nuclear energy by 2030. Meantime, Germany has said it would also phase out its nuclear program while Italy and Switzerland have expressed similar sentiments.

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The company says that the expansion is expected during a period when a number of new mines have been put on hold. At the same time, the program that has been responsible for dismantling Russia’s Cold War nuclear arsenal is coming to an end. That material has been used to fuel nuclear plants.

Internationally, uranium mining now meets only 65 percent of today’s reactor requirements, according to MIT. The remaining global demand is met by using utility inventories and by incorporating new fuel efficiencies that make plants more productive. It’s also met by decommissioning nuclear weapons.

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