INTERNATIONAL: December 11, 2007


The spot price of uranium, used to fuel nuclear reactors worldwide, is trading at US$93 per pound on Monday, according to Ux Consulting.


The price has come off due to a seasonal slowdown and inventory de-stocking after hitting a record high of US$136 in June. The price has risen from US$7 in 2000 as nuclear power is back in the spotlight in times of heightened concern about security of energy supply.

The industry is also back in focus as fear of climate change has helped to overcome years of opposition to nuclear power after the 1986 Chernobyl disaster in Russia.

NUCLEAR POWER

The first commercial nuclear power plants started operation in the 1950s and today there are 439 stations accounting for 16 percent, or 2,658 billion kWh, of global energy consumption.

In the OECD, the total fuel costs of a nuclear power plant are typically about one third of those for a coal-fired plant.

However, nuclear plants require large initial capital investments.

FROM ORE TO ENERGY

Uranium ore is mined and purified at the mine site. The end product of the mining and milling stages is uranium oxide concentrate (U3O8) and this is the form in which it is sold.

Ore concentrate, or yellow cake, is then chemically converted into uranium hexafluoride (UF6), a gas which is transported to enrichment plants.

Once the concentration of U-235 reaches 3 to 5 percent, from 0.7 percent in natural uranium, it is possible to use the converted uranium pellets in power stations where fission releases thermal energy necessary for electricity generation.

When the fuel has been in the reactor for about three years, it is removed and stored.

URANIUM SUPPLY

Production of U3O8 in 2006 was 46,499 tonnes or about 70 percent of utilities' annual requirements. The rest, around 20,000 tonnes, came from secondary supplies such as utility stockpiles, recycled uranium from spent fuel and scrapped atomic weapons.

In 2006, Canada supplied world markets with one quarter of world uranium production and Australia produced some 20 percent.

The other top 10 producers were Kazakhstan, Niger, Russia, Namibia, Uzbekistan, the US, Ukraine and China.

It is estimated that Australia has about 24 percent of the world's low-cost recoverable uranium deposits, Kazakhstan holds 17 percent and Canada around 9 percent.

URANIUM DEMAND

Uranium demand in 2006 was 64,181 tonnes and is estimated at 64,375 in 2007. The world's measured resources of uranium (4.7 million tonnes), in the cost category around the current spot price and used only in conventional reactors, are enough to last for some 70 years.

There are some 439 reactors operating, another 33 are under construction, 94 are planned (mostly expected to be in operation within 8 years) and 222 more are proposed.

The WNA estimates demand to reach 109,000 tonnes by 2030 in their reference scenario and in the upper scenario 149,000.

URANIUM PRICE

The increased interest in uranium prompted the New York Mercantile Exchange (NYMEX) to launch a five-year futures contract together with Ux Consulting Company (UxC) in May.

Before this contract there was no formal exchange for uranium and price indicators have therefore been developed by a small number of private business organisations, such as UxC.

Around 85 percent of all uranium is sold under long-term contracts, ranging from two to 10 years and the rest, some 20,000 to 30,000 million pounds, are sold on the spot market.

Source: The World Nuclear Association

(Reporting by Anna Stablum; Editing by Chris Johnson)


REUTERS NEWS SERVICE