Uranium Week: All Energy Sources Required

US uranium concentrate production in the December quarter increased by 20% on the September quarter, but was down -88% from a year ago to mark the lowest level of production since 1996. US uranium producers were thus buoyed by news last week the Trump Administration has included US$150m in its proposed 2021 budget for the creation of a national uranium reserve.

The proposal reflects the recommendations of President Trump’s Working Group, which was established last year to solve the issue of US producers being shut out by cheaper uranium imports wanting to force US nuclear power generators, who are being shut out by cheaper gas-fired and renewable power, to buy a mandated amount of more expensive product domestically.

It could only have been a lose-lose, thus the Working Group came up with the solution of the government buying the uranium. The proposed budget still has to be passed by a hostile House, nonetheless.

Going Green

While the US nuclear power industry may be struggling, the International Energy Agency last week reported the 2019 increase in nuclear power generation globally helped avoid an additional 50m tonnes of CO2 emissions. Recent increases in global greenhouse gas emissions from the energy sector stabilised at 33 GtCO2 thanks to higher nuclear output, increased generation from renewables, and coal-to-gas switching in advanced economies, the IEA noted.

“We have the energy technologies to do this,” noted the IEA director, with regard long term climate and energy goals, “and we have to make use of them all.”

Large US power generator Dominion Energy will seek to extend licences for its reactor fleet as part of a commitment to achieve net zero emissions by 2050, as announced last week. Dominion will also increase investment in wind and solar power, lower-carbon natural gas, and carbon-beneficial renewable natural gas (which is derived from biogas).

Over the long term, achieving this goal will also require supportive legislative and regulatory policies and technological advancements, including support for testing and deployment of such technologies as large-scale energy storage, hydrogen, advanced nuclear, and carbon capture, the company noted.

Dominion filed an application with the US Nuclear Regulatory Commission to extend the operating licenses for two of its reactors through 2052 and 2053, when they will be 80 years old.

Still Quiet

Industry consultant TradeTech reports five transactions in the uranium spot market last week totalling 600,000lbs U3O8 equivalent. TradeTech’s weekly spot price indicator has fallen -US5c to US$24.60/lb. The consultant notes, however, that prices are subject to notable variance depending on delivery location (US/Canada/Europe).

A number of other utilities are in discussions with potential suppliers to secure material in the mid and long term delivery windows but negotiations are moving slowly. TradeTech’s term market price indicators remain at US$28.25/lb (mid) and US$33.00/lb (long).

Greg Peel

About Greg Peel

Greg Peel joined Macquarie Bank in 1986 and acquired trading experience in equities, currency, fixed income and commodities derivatives, ultimately being appointed director of equity derivatives trading. He later published In With The Smart Money (a plain English guide to the mysterious world of financial markets and derivatives) and acted as a consultant to boutique investment funds. In 2004 Greg joined FNArena as a contributing writer. He is now a director and principal of the company. Greg compliments the journalistic background of the FNArena team with lengthy experience as a financial markets proprietary trader.

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