This week’s uranium report could simply be left as “nothing happened”. At least nothing of major uranium industry implication. The same issues remain in place, so rather than rake over old ground yet again, as to why uranium prices are in the doldrums, this week we’ll zoom in Australia’s nuclear dilemma.
For the record, industry consultant TradeTech reported ten transactions completed in the uranium spot market last week totalling 1mlbs U3O8 equivalent. As buyers were again largely MIA, prices fell gradually during the week. TradeTech’s weekly spot price indicator has fallen -US50c to US$24.40/lb.
Term price indicators remain at US$28.25/lb (mid) and US$33.00 (long).
How to React?
The nuclear power debate has heated up in Australia once more. Driving fresh debate is the pending shutdown of ageing coal-fired power stations that provide Australia’s base load electricity. The federal government wants to build new coal-fired power stations. This policy already had its critics but as a result of this season’s bushfire disaster, an electoral groundswell is calling for the government to recognise climate change and act accordingly before it’s too late.
Australians are now generally opposed to both coal-fired power and new thermal coal mines. But not all Australians. The country is the world’s largest exporter of coal. The coal mining industry employs thousands, and thousands more are supported indirectly by that industry. The surprise victory for the coal-friendly Coalition at last year’s federal election was in part due to support from Queensland-based electorates, Queensland being Australia’s premier coal producing state.
Nuclear power has long been proposed as an alternative source to meet Australia’s electricity needs, if for no other reason Australia boasts the world’s largest known reserves of uranium. But from Three Mile Island to Chernobyl and Fukushima, successive governments have considered nuclear power to be electoral suicide. The debate is now back on again nevertheless, to lift bans on uranium mining and build nuclear reactors.
Australia is a federation of six sovereign states and two federal territories. Of those six states, four have bans on uranium mining. Tasmania has no known commercial uranium deposits, leaving South Australia as the only state with operating uranium mines. Of those four operating mines, two are currently under care & maintenance pending improved uranium prices, leaving only BHP Group’s ((BHP)) Olympic Dam and the foreign-owned Beverley in operation. A fifth mine – Ranger in the Northern Territory — is currently producing uranium but only from stockpiled ore.
Over a decade ago, the then Queensland premier decided to lift the state’s ban on uranium mining. So swift and brutal was the backlash from the coal lobby, the premier very quickly changed his mind. In the interim, one Western Australia state government lifted the ban on uranium mining, only to have the next government ban it again. Two mines under construction on the basis of the prior policy were exempted.
The Australian federal government previously limited the number of allowable uranium mines, but that policy has since been abandoned. The federal government is currently content to restrict the number of countries Australia can export uranium to.
Last week the New South Wales deputy premier supported a bill in state parliament to overturn a nuclear power ban, after a parliamentary inquiry recommended that the law prohibiting uranium mining and nuclear facilities should be repealed. The bill has the support of the Minerals Council of Australia, and the Australian Workers Union, which supports uranium mining and nuclear power for the jobs both will create. But the AWU’s stance puts it at odds with the Australian Council of Trade Unions, which has long been anti-uranium for what we might call Fukushima reasons.
And support for uranium mining and nuclear power is not split down party lines at either federal or state level. The debate is splitting parties.
A lifting of state uranium mining bans would likely not achieve much in the near term. The marginal cost of new production well exceeds current uranium trading prices. To not build nuclear reactors, on the other hand, when the issue of Australia’s future base load power and electricity prices is paramount, and Australia has abundant uranium resources, is seen by supporters as pure folly.
The debate will rage on, but in the short term at least, likely go nowhere.