The shutdown of nuclear power plants in the wake of the disaster generated a large surplus of uranium – combined with the rise of fracking and natural gas, drove uranium prices to record lows, and forced most of the few mining companies to shut down mines, lay off workers and reduce debt in a struggle just to survive. This could have long-term implications because it is expensive to shut down a uranium mining operation, and difficult to reverse.
Uranium prices before the 2008 global financial meltdown had peaked around $140 a pound in the summer of 2007. Before 2011, market prices had dropped to $70 a pound. Uranium prices continued to fall after the Fukushima Daiichi disaster and in September market prices plummeted to $23.50 a pound, the lowest in over a decade (or earlier if you adjust for inflation). One of the factors in uranium price is the pace of development of the nuclear industry, namely the construction of new nuclear power plants, which has slowed dramatically. The impacts of the rise of natural gas have forced utilities operating nuclear power plants to tighten belts and cut budgets to keep reactors online. When these efforts fail, the plant either shuts down or the state steps in and provides a bailout.
Fuel for nuclear reactors generally takes 18-24 months to process from the time it is mined before it is ready to use to generate power. Nuclear power plants usually purchase enough fuel to provide an inventory capable of supplying a reactor for 5-7 years. When reactors around the world shut down as the disaster in Japan unfurled, utilities saw the market was being flooded with excess fuel, that these surplus reserves would persist for years, and reduced their purchasing arrangements accordingly. This was a critical blow to the uranium mining industry, because it reduced the demand for uranium mining while utilities lived off of accumulating stockpiles.
In April, 2016, the Canadian uranium mining company Cameco shut down mining operations at the Rabbit Lake Mine, the longest-operating uranium mine in North America, after acknowledging that they couldn’t cover operating and capital costs required to keep the mine open. At an industry conference, head of Cameco marketing Tim Gabruch pointed out “desperate times call for desperate measures.”
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