Base Metals Energy

URANIUM | Key Take-Aways from NEI Uranium Fuel Conference in Boston

From the offices of Amir Adnani:
Scott Melbye, our executive VP just returned from the Nuclear Energy Institute Uranium Fuel Conference in Boston. His takeaways are indicative of improving fundamentals that are driving the uranium market:

  • There was a strong turnout for this conference that focuses solely on nuclear fuel cycle issues. Continuing the trend of recent industry meetings, a number of attendees from the investment community were also present.
  • Cameco’s care and maintenance of the McArthur River mine was also a leading topic of conversation, particularly their ongoing procurement activity focused on the backfilling of customer contract commitments from open market purchases. While the price is already up over 60% from the 12-year low, they advised their purchasing program is still only in the early stages. They have increased their targeted purchase volumes expecting to buy 1-3 million pounds additionally by years-end and 10-12 million pounds in 2019.
  • UxC gave an unusually upbeat presentation on the uranium market, titled “Market on the Mend” noting global nuclear energy generation in 2018 has now surpassed the level of global nuclear power output that existed pre-Fukushima. They also stated 2018 has been a key year on the supply side with accelerated rebalancing of fundamentals due to the massive cuts to global production and increased investor purchases of uranium. They added that this was the first time since 2010 that global reactor demand and supplies fell back into balance (and deficit) as a result.
  • While Enricher underfeeding has contributed to oversupply of the uranium market over the past several years, both Urenco and Tenex confirmed the 20 million lbs. per year source of supply has peaked and is slated to decline. All expansion plans have been scrapped and older centrifuges are being taken off-line and decommissioned. The return of Japanese demand and supplies to other new entrants is contributing to the fuller utilization of existing capacity for enrichment activities and less for uranium creation.
  • In meetings with most of the utilities present, discussions centered around the Department of Commerce section 232 on foreign imports. This has put off some procurements plans on hold until the outcome is more clear, but the utilities acknowledge that their uncommitted requirements are rising in the coming years and a renewed procurement cycle needs to take place.
  • Finally, keynote speaker, Michael Shellenberger made a number of compelling arguments for nuclear in the global energy debate:
    • Over the past 40 years, nuclear energy has been shown to be the safest form of generating electricity, having saved over 1.8 million lives, compared to alternatives.
    • Nuclear power scaled up over this time to provide 6% of global electricity at a cost of $1.8 trillion, whereas, solar and wind has taken $2 trillion to scale up to provide only 3% of global energy.
    • Germany, which has increased its share of renewables while phasing out nuclear power, produces 10 times more CO2 per unit of energy than nuclear-heavy France, and German energy is twice as expensive as France’s.

In summary, this was an upbeat conference with a positive tone compared to recent years and encouraging for a continued recovery in the uranium price.
Amir Adnani  |  President & CEO