Mine Closure Warning Amid Uranium Price Concerns
Source: Rössing Uranium Limited / WNA / Cameco / ESA
Editor: Daniel MacIsaac
2004 January 10
Meanwhile, Canada's Cameco Corporation, the world's largest supplier of uranium, released its own position paper on the impact of uranium prices on 9th January.
Cameco said "some of the recent and unexpected market developments" led it to review the impact of spot-price increases on its sales-contract portfolio. Cameco said it "feels it is prudent to remind investors that many of the company's contracts were signed years ago when spot prices were much lower. Consequently, the contracts have pricing terms which will limit the benefit of further spot prices increases in 2004."
While Cameco pointed out that it has benefited from spot price increases in 2003 (which saw an increase of more than 45%), it has also had to limit the length of contracts to retain "as much upside pricing potential as possible - while ensuring adequate cash flow with a mix of market-related and fixed-price contracts".
Cameco said it has more than 100 million pounds of uranium committed over the next five years. It said its committed sales, which declined rapidly over this period, will be replaced with contracts reflecting the current, significantly-improved market outlook.
Cameco president and chief executive Jerry Grandey said: "Future uranium prices must reflect the risks taken and returns required by producers to bring on new mines that will be needed in the coming years to provide secure supply to nuclear utility customers."
Cameco expects its uranium sales volumes to total approximately 32 million pounds this year.
The Euratom Supply Agency's (ESA) annual report for 2002 warned: "Known world reserves of uranium are more than enough to cover the requirements of existing reactors and are likely to continue to increase as exploration progresses but, as it takes many years from exploration to actual production, it cannot be excluded that there will be periods of instability with shortages of uranium and sudden price increases."
The ESA added that present levels of uranium would not be increased "until producers see an adequate price and return on their investment".
From: Jerry Cuttler [mailto:firstname.lastname@example.org]
Sent: Saturday January 10, 2004 8:13 PM
To: Muckerheide; email@example.com
Cc: cdn-nucl-l (E-mail)
Subject: [MbrExchange] CANDU fuel is cheap, U price going up
In Canada, the cost of using natural uranium fuel is low.
In the Darlington Nuclear Generating Station, in 1996, the production unit energy cost (operating, maintenance, administration and fuel) was 0.65 cents (US) per kWh. The cost of the fuel was 0.19 cents per kWh, which included the provision for permanent used fuel disposal, at an average cost of 0.07 cents per kWh.*
Costs have certainly risen, especially after 9/11.
* Strickert RJ. "Performance of 4 x 935 MWe Darlington Nuclear Generating Station". Proceedings '96 Joint KAIF/CNA CANDU Seminar. Seoul, Korea, May 1996.
From: Denis Beller [mailto:firstname.lastname@example.org]
Sent: Friday January 09, 2004 8:38 PM
To: ANS Member Exchange; PIC Listserve
Subject: [MbrExchange] U price going up
First I'd seen of this, nearly double in four years.
>Average uranium spot price
>Year (US$/lb U3O8)