Uranium long-term market forecast is as bad as its short term – from Nuclear Energy Institute
www.neimagazine.com/opinion/opinionthe-future-of-uranium-higher-prices-to-come-4259437/ Predictions of the rise in price of uranium are unjustified; they do not fully appreciate the segmented nature of the market. Steve Kidd 6 May 14
The world uranium market has fallen back substantially from the highs it sustained in the period around 2005-2010, when the spot price peaked at over $130 per pound in summer 2007. After the Fukushima accident in 2011, the price drifted down further and has been stable at the $35 per pound level since last summer. Although this is well above the $10 per pound that prevailed for the long period from the late 1980s up until 2003, it is universally agreed that very few (if any) new mines can be developed at today’s price level. The suggestion is therefore made (particularly by uranium producers and their financial sector backers) that with rising demand, there will be shortages of supply in future unless we soon have much higher prices to encourage new production. On the demand side, a lot of attention is currently being to the upcoming Japanese reactor restart programme, in terms of timing and number of reactors.
A recent report from my company (East Cliff Consulting, ‘The Fifth Age of Uranium’) shows why the case made by the uranium bulls is in reality full of holes. We are now more likely to see a long period of relatively low prices, in which uranium producers will find it hard to make a living.
Substantial oversupply in the Fourth Age
The starting point is to understand the full history of uranium supply and demand. This is covered in the WNA’s biennial fuel market report, which identifies four distinct ages running from 1945 until today. The fourth of these began in 2003, when prices started rising sharply to mark the end of the third age, which was the long period of inventory rundown and constrained production lasting from the late 1980s. Talk in 2003 was of a “renaissance” of nuclear power and lots of new mines were apparently needed to meet their fuel requirements, while previously abundant secondary supplies would gradually wither away. Not so different from what the optimists are saying about uranium today.
World production certainly responded strongly to the obvious price signal back then and it had risen by half by 2010. One curious feature, however, was that the increase was almost entirely concentrated in only one country, namely Kazakhstan. Apart from this, hundreds of “junior” uranium companies suddenly appeared but the only company successful in establishing new large-scale production facilities was Paladin, with Langer Heinrich in Namibia and Kayelekera in Malawi. The others succeeded in mining only the financial markets.
Another remarkable fact was that despite all the hype about nuclear growth plans, the level of underlying uranium demand did not rise at all during this period. This is even without the adverse impact of the accident at Fukushima in 2011. Shutdowns of ageing reactors in various countries were just balanced by the commissioning of new units (increasingly in China). Another crucial factor has been a fundamental realignment in the relationship between uranium and enrichment requirements. The closure of the inefficient gaseous diffusion enrichment plants removed the high marginal cost production which had propped up prices, while notably higher uranium prices in themselves encouraged the use of higher enrichment (through reducing the optimum “tails assay”). Enrichment is now expected to remain cheap and abundant as centrifuge plants are modular and capacity can be expanded relatively easily to meet demand, so this substitution of enrichment for uranium will continue to be important.
The impact of much higher production combined with static demand during this fourth uranium age is substantial over-supply in the world uranium market, with prices naturally falling back to lower levels. The other obvious corollary of this period has been a renewed upsurge in uranium inventory levels in the United States, Europe and (with the shutdown of reactors since Fukushima) Japan. Some of this has been entirely voluntary on the part of the fuel buyers, who want more security of supply. The biggest increase has been in China, which has been building huge inventory balances to provide security for the anticipated fuel requirements of its rapid reactor building programme. On the other hand, some of the accumulation (such as in Japan) has been involuntary and this material can be used to balance the market over the next period, effectively at the expense of fresh production.
In fact China can be seen as the mirror image of the production growth in Kazakhstan, as the majority of Chinese imports have been sourced from there. The rest of the world has continued much as before, with no overall nuclear growth and not much of any real substance happening in the development of new uranium mines, except a few key projects such as Cigar Lake in Canada.
Uranium demand to increase in China and Russia
The uranium bulls continue to point to the prospects for nuclear growth to 2030. The problem is that most of this will be concentrated in China and Russia. Over half will likely be in China and the Chinese may also become important in supplying reactors to other countries in the 2020s. The Russian domestic nuclear programme is now progressing quite well, and they too will be a key supplier of reactors to other countries in the period to 2030. When the Russians supply a reactor, they invariably include long-term fuel contracts. What is important is that uranium demand will almost certainly fall in the key markets in Western Europe and North America, which are satisfied by the established uranium producers. Many Japanese reactors will undoubtedly restart but it will take a long time to unwind the inventory accumulation there.
Those who believe in higher uranium prices take an over-optimistic demand scenario. It can now be argued that the range of possibilities has actually narrowed considerably and it is appropriate to centre discussion on just one main case to 2030. Upper scenarios showing rapid nuclear growth in many countries including plants starting up in new countries now look very unlikely, certainly before the late 2020s. If there is to be a nuclear renaissance, it is now much more likely to happen later, and with a new generation of reactors. On the other hand, predictions that another major accident would shut down nuclear in lots of countries have been negated by the experience of Fukushima. Although there remain some uncertainties, the outlying upper and lower cases are much less credible than before.
Uranium market split into three
So we are entering a fifth era of uranium, where the market is split into three.
The Chinese will favour investing directly in mines to satisfy their requirements. These (like Husab in Namibia) will not necessarily be at the low end of the cost curve: there are important geopolitical considerations too and the Chinese are keen to get involved directly in the economic development of many countries, particularly in Africa. They are also not going to “play ball” with the established uranium market. Although they will maintain a presence in the spot market and sign further long-term supply contracts with producers, they have learned their lesson from the iron ore market. In that sector their heavy dependence on imports from BHP Billiton, Rio Tinto and Vale has given these producers fantastic profits.
The Russians will continue to be significant nuclear fuel exporters but their own market will remain essentially closed to outsiders. They still have secondary supplies to tap into (plenty of surplus HEU remains to be down-blended) and they will follow the Chinese and invest directly in uranium assets if their own domestic production remains constrained. Their recent acquisition of the producer Uranium One can be seen very much in this vein.
The established uranium producers will have the remainder of the market to satisfy and that will likely be declining in magnitude. There are bright spots are South Korea and the Middle East (where Saudi Arabia may join the UAE in having a nuclear programme) but the prospects in North America and Europe are not so good. In the United States, the number of operating reactors will fall by 2030, with a small number of new units not sufficient to compensate for closures due to cheap shale gas and the incursion of subsidised renewable energy into power markets. Although reactors may well be licensed for up to 80 years, they will not operate unless the economic fundamentals are right. In Canada too, it seems unlikely that all three nuclear stations in Ontario will be refurbished, and there is a strong possibility that Pickering will close. InEurope, even in France the future of the currently operating units is now in question. It is likely that there will be a gradual reduction in the nuclear share of electricity in France towards 50% and so older units (beyond Fessenheim) will likely close by 2030. New-build in the United Kingdom will only compensate for units shutting down, while further new units will only happen in a few countries such as Finland and (possibly) the Czech Republic. So with countries like Belgium and Switzerland following Germany into a nuclear phase-out, the overall European situation is one of gentle decline.
This market segmentation and the way the Chinese and Russians will operate means that the two prime analytical devices utilised in the uranium market are both now useless. First, calculated annual world supply-demand balances (miraculously often showing a shortage after 3-5 years) are irrelevant in a segmented market, where key actors with expanding demand choose to go it alone. For a time in the early 2000s, it looked as if a globalised world nuclear fuel market could emerge, but this has not happened and it is arguably now going into reverse. Secondly, uranium supply curves (based on mine cost data), demonstrating the need for higher prices as demand expands, are also invalidated. China and Russia (and probably India too, if it eventually gets its nuclear act together) will develop uranium assets wherever it best suits them. They have the confidence to bypass the conventional market, which could increasingly become merely a sideshow.
Another issue to watch is the persistence of secondary supplies beyond Russia. Only part of the 2.5 million tonnes of uranium mined since 1945 has been utilised. Almost 2 million tonnes of depleted uranium is an attractive resource while there is overcapacity in enrichment and cheaper prices. In the very long term, China, Russia and India are committed to reprocessing their used fuel and will probably eventually succeed in tempering their uranium use by building large reprocessing plants. Any substantial replacement of uranium, however, will have to await the next generation of reactors, which will be fuelled very differently from today’s large light water designs.
Fifth Age price predictions
In this fifth age of uranium, prices will essentially be determined by the cash costs of production of operating mines (and not by the full costs of future mines). This means a reversion to the long period of low (but relatively stable) uranium prices of the late 1980s and 1990s (the third age), but at a higher level to reflect the greater level of production now, the escalation of mining costs and the movements in currency exchange rates. The shortages predicted by many analysts (leading to rapid price increases to provide good rates of return on their favourite projects) are purely a mirage.
The outlook is therefore not favourable for either current or prospective uranium producers. Only those with low-cost operations will prosper. Others will struggle to stay in business and further mine closures (beyond Paladin’s Kayelekera which is now on “care and maintenance”) are definitely on the horizon. A high-profile mine closure is one factor that could cause the price to spike, but historical experience is actually rather different: once mines get into operation, owners will usually withstand short-term financial losses so long as they are convinced that there are better times around the corner. And they tend to be incurable optimists.
Steve Kidd is an independent nuclear consultant and economist with 17 years of work in senior positions at the World Nuclear Association and its predecessor organization, the Uranium Institute.
Coalition government utterly dependent on funding from mining industry
The fossil fuel industry and who really runs Australia Independent Australia Sandi Keane 6 May 2014,The age of entitlement is over in Australia — except for the dominant fossil fuel industry and those rich enough to be able to buy political patronage.“……..Last month, at global talks in Nairobi, energy experts at were calling on subsidies to oil, gas and coal prices to be cut:
‘According to the International Energy Agency, the elimination of fossil fuel subsidies will be the single most effective measure for climate change mitigation and would be one of the most effective measures for keeping the temperature rise beneath two degrees, which has been agreed upon in the international climate negotiations.’
The talks were organized by Germany’s development agency GIZ, the UN’s Environment Program and the International Monetary Fund. It was noted that most European countries have already cut their fossil fuel subsidies.
There’s little chance of the Abbott Government following suit while its policy outcomes continue to favour Australia’s richest corporate elites in return for hefty political donations. (See below – graph explains donations from mining industries)
At this point, donations – other than certain donations, such as from developers as in NSW – are not illegal.
Until such time as there is a national ICAC and an appetite to clean up the corrupt practice of political donations being tied to favourable decisions, we know who really governs Australia — the miners and the moguls. http://www.independentaustralia.net/business/business-display/who-really-runs-australia-the-miners-and-the-moguls,6450
The ever escalating costs of USA’s nuclear weapons, and of dealing with plutonium wastes
Destroying and building nuclear weapons have something in common: high overruns By Walter Pincus, WP 
May 5 There is a budget crisis, but the truth is we’re still planning to spend tens of billions of dollars to eliminate plutonium from thousands of dismantled, surplus nuclear weapons built during the Cold War.
Not to worry. We also are spending hundreds of billions on building newer nuclear warheads and bombs, and 21st-century submarines, bombers and intercontinental ballistic missiles to keep more than 1,000 nuclear weapons at the ready.
One thing that building and destroying the weapons have in common: Their cost overruns are way beyond original estimates…….With all these complaints about wasted spending in domestic programs that help the less fortunate, why aren’t the excessive costs of nuclear weapons activities being debated in Congress? http://www.washingtonpost.com/world/national-security/destroying-and-building-nuclear-weapons-have-something-in-common-high-overruns/2014/05/05/75b2bb40-d22e-11e3-9e25-188ebe1fa93b_story.html
Video discussion points to renewable energy displacing coal in India
VIDEO Renewable energy may trump growth in Australian coal exports to India http://www.abc.net.au/news/2014-05-06/bt-kevin-bertoli-pm-capital/5434770 Australia Network News 8 May 14 Hopes of strong growth in exports of Australian coal to the fast-growing economy of India may be dashed as cheaper alternative energy sources become more attractive.
A new report by the Institute for Energy, Economics and Financial Analysis predicts the sub-continent won’t be able to afford imported coal and it will turn instead to either its own reserves or renewables such as solar and wind.
But the report has been met with heavy criticism from Australia’s coal industry and contradicts growth forecasts by the international energy agency.
To talk about this in more detail, Whitney Fitzsimmons spoke to Kevin Bertoli, portfolio manager of Asian Equities at PM Capital.
In the UK the lobbyists are now teaching “Green Nuclear”
Chuggers For Nuclear Take Us For Mugs Tuesday 6TH by Alan Simpson, Morning Star In the sleazy world of energy politics, prepare to be groomed – or even ‘normalised,’ AT A high-powered PR summit in London, energy giant EDF’s head of communications proudly reported that sponsoring the Olympics had “added value to the nuclear brand.”
Flushed with this success, EDF now plans to harness a new team of company volunteers who will “go out into the community and schools to tell the story.” Their Bringing Nuclear to Life initiative will unleash hundreds of volunteer EDF joggers onto the streets, each carrying the torch for new nuclear. Their stated objective will be to “normalise nuclear to consumers.”
So, just when you thought it might be safe to step out a bit more — when double glazing salesmen, charity fundraisers and energy company “swappers” might be taking a breather — a new sort of “chugger” is about to hit the streets.
You don’t have to fear being Saved for God or tapped for a standing order.
These chuggers will just want to normalise you. ………..
But you have to give it to the PR guys — they really know how to sell soap to suckers. Knowing that the economics will never stand up to scrutiny, they have to build acceptance on something else.
Fear of “the lights going out” is one angle, but it’s not a secure one. The more that smart technologies allow communities to move towards their own sustainable energy systems, the less willing the public will be to pay for obsolete energy highways. They will become as last century as public phone boxes.
The industry knows it has to try to sell virtue. That is why David Cameron consistently refers — inaccurately — to nuclear as carbon-free energy. Clean and Green, that has to be the message if we are to be normalised into loving nuclear enough to pay its extravagant costs.
I’ve even heard the term “green nuclear” used as the shorthand message as to how to save the planet. As oxymorons go, I have to admit it’s a bit of a belter. here are phrases that almost defy belief that they could ever turn up in the same sentence, like the words “He’s a good bloke” and “Jimmy Savile.”
But “green nuclear” will begin to make its way into the sales patter that normalisers use to retell the nuclear tale. Never underestimate either the chutzpah of the advertising industry or the desperation of an energy giant in search of an economic lifeline.
Are we daft enough to fall for it? Having bought the political parties, the industry believes the public can learn to love the financial millstone that new nuclear requires. We will have to see whether sanity and technology proves them wrong. Go carefully around the streets. http://www.morningstaronline.co.uk/a-6e7a-Chuggers-for-nuclear-take-us-for-mugs#.U2qY9YFdWik
100% renewable energy can be achieved, and with views less offensive than coal and gas facilities
the amount of land taken up by wind farms is trivial, compared with the footprint of an open-cut mine or a gas processing hub – a few tens of square metres per tower, plus access tracks. The farmers who host the wind generators continue farming as usual, but benefit from what is effectively a second cash crop that pays them thousands of dollars per machine per year.
While Mr Hockey might find the view of wind turbines along Lake George “utterly offensive”, others might take exception to the sight of open-cut coal mines, coal and gas export terminals, oil spills, fracking equipment, smog, and coal seam fires.
Renewable energy target can go all the way to 100% – if we let it http://theconversation.com/renewable-energy-target-can-go-all-the-way-to-100-if-we-let-it-26318 Andrew Blakers Director of the Centre for Sustainable Energy Systems (CSES) at Australian National University 7 May 14 The political outlook for renewable energy is not great – and I’m not just talking about the view out of Joe Hockey’s car window.
The Renewable Energy Target (RET), which aims to deliver 41 million megawatt-hours of extra renewable energy by 2020, is under review by the federal government. The signs are not promising for preservation of the target, given the views espoused by the Treasurer and the composition of the Review Committee.
But the RET is not an end in its own right. It is also a stepping stone for moving to a 100% renewable power sector by 2050. The problem is that getting there requires not just a practical plan, but also the political will to put it into action.
Investing in renewables
A prime purpose of the RET is to reduce greenhouse gas emissions. In conjunction with energy efficiency, the RET has been doing this so effectively that Australia’s emissions from electricity generation have been falling since 2008. The RET allows renewable energy to compete directly with old-build gas and coal power stations as they move towards the end of their useful lives.
Despite the fact that the government may be preparing to wind back the RET to something more modest, it is not an especially challenging target in its current form. The most likely way to hit the 2020 target will be to deploy wind and photovoltaic (PV) solar power, which are by far the leading types of renewable energy being deployed around the world. To hit the target, Australia will need about 9000 megawatts of new capacity from each of these two technologies.
Australia already has about 6000 MW of wind and PV capacity, mostly constructed over the past five years. So that means building about 1200 MW each of PV and wind power each year for the rest of the decade. Not too difficult, considering that 1000 MW of PV power was installed in 2012, mostly on rooftops. Indeed, there are now more than 1.3 million PV rooftops in Australia.
In terms of costs, both PV and wind are competitive with new-build gas and coal power stations. And the outlook for coal is not as certain as many in the sector in Australia would like, with new analysis suggesting that the industry could decline because of softening import markets in China and India. As a share of the Australian power generation market, coal has been declining since 2008, as a result of improved energy efficiency and the rise of renewables.
As all current fossil fuel power generators will have reached the end of their useful lives before 2050, they will have to be steadily replaced over the coming 35 years. Installation of solar and wind will allow this to be done with minimal additional cost and with near-zero greenhouse gas emissions.
The RET as a stepping stone
Moving to 100% renewables by mid-century might sound like a tall order. But the current RET actually puts us on track to do it – all it would require would be to carry on at the same rate of investment beyond 2020.nstalling around 1200 MW each of new solar and wind power every year, as required by the RET, would be enough to replace the entire existing fossil fuel electricity sector by 2050.
There would be no need to decommission existing power stations early – rather, they could just be replaced as they reach the end of their useful lives. Thus the RET offers a stepping stone to 100% renewable energy by natural attrition – an important attribute if we are to avoid spending money unnecessarily.
The RET offers a way to ensure that ageing coal-fired power stations are replaced by low-emission renewable alternatives. Wind and solar power are essentially unconstrained by environmental, resource, material supply, security and other problems that beset fossil fuels. The need for the RET will decline over time as retirement of existing generators gathers pace.
The political will?
Demolishing the effectiveness of the RET will make it more difficult to meet the government’s greenhouse emissions target of a 5% reduction on 2000 levels by 2020. The sooner Australia adapts to the radical changes in the global electricity industry, caused by dramatic falls in renewable energy costs, the better. If the federal government leaves the RET alone, Australia will be on track for an all-renewable electricity system by mid-century.
Meanwhile, the amount of land taken up by wind farms is trivial, compared with the footprint of an open-cut mine or a gas processing hub – a few tens of square metres per tower, plus access tracks. The farmers who host the wind generators continue farming as usual, but benefit from what is effectively a second cash crop that pays them thousands of dollars per machine per year.
While Mr Hockey might find the view of wind turbines along Lake George “utterly offensive”, others might take exception to the sight of open-cut coal mines, coal and gas export terminals, oil spills, fracking equipment, smog, and coal seam fires.
They might also have an opinion about whether consequences such as oil-related warfare and global warming are more offensive than an allegedly spoiled view.
Wind haters control Abbott government policy – poor prospects for future wind energy development
This may be as good as it gets for Australian wind energy http://reneweconomy.com.au/2014/may-good-gets-australian-wind-energy-72276 By Giles Parkinson on 6 May 2014 New data released on Monday suggested that Australia in the month of April had reached its record level of output for wind energy – 4.6 per cent of total generation from the National Electricity Market.
Accurately measuring the solar energy potential for South West Australia
South-west Australia’s potential solar output measured with accuracy Phys Org 7 May by Rebecca Graham Researchers have developed an algorithm that can be used to simulate the hour-by-hour power output of both photovoltaic and concentrated solar thermal power systems for any location in the south-west corner of Australia. The model is simple enough to run inside a web-browser by the general public and could be tailored to other regions around the world.
Led by Murdoch University’s Dean Laslett, an engineering PhD candidate, the research forms part of a series of studies originated by Sustainable Energy Now aimed at developing an accessible and interactive computer simulation of renewable energy power systems for the South-West Interconnected System (SWIS); WA’s main electricity grid.
As clouds affect how the three main components of solar radiation – direct, diffuse and reflected – reach the earth’s surface, the algorithm was developed through a series of calculations using seasonal rainfall patterns and the three solar radiation components; leading to estimates of daily and hourly cloudiness across the region.
“The seasonal rainfall pattern across WA generally decreases with distance from the coast, with a zone of high rainfall in the south-west corner and the Kimberley,” Mr Laslett says.
“Seasonal cloudiness follows the same pattern. Hence if the longitude and latitude of a location is converted into a distance along the coast-line and a distance inland, estimation of seasonal cloudiness can be simplified.
“An estimate of all three solar radiation components is [also] needed…………”Because the model can be used to estimate all three components of solar irradiance, it’s possible to change the location of one or several photovoltaic or concentrated solar thermal systems and get an idea of how overall energy generation might change.”
“Also because our model can run inside a web-browser, this ability becomes widely accessible to the general public … they can play around and see for themselves what a solar energy power system for the SWIS might look like.” : http://phys.org/news/2014-05-south-west-australia-potential-solar-output.html#jCp
Australian government under the control of the fossil fuel industries
The fossil fuel industry and who really runs Australia Independent Australia Sandi Keane 6 May 2014,The age of entitlement is over in Australia — except for the dominant fossil fuel industry and those rich enough to be able to buy political patronage. Deputy editor Sandi Keane reports.
Treasurer Joe Hockey urges all of us to “share the pain” for his confected “budget emergency”,but, sadly, ‘sharing’ isn’t in the fossil fuel industry’s playbook.
Big Carbon has always balked at sharing profits from Australia’s mineral wealth.
In stark contrast to Norway, where a mining tax of 78% has resulted in a sovereign wealth fund twice the size of its GDP, Australia’s effective tax rate for foreign multinational miners is a mere 13%.
Instead, whilst crying poor, the mining industry managed to stump up $22 million for an anti-tax campaign and, in 2010, bring down a prime minister — Kevin Rudd.
This week, Australia’s dominant fossil fuel industry threw down the gauntlet to Hockey’s razor gang after it threatened to trim the luxurious 38% diesel fuel tax rebate.
The speed and the manner in which Hockey and Abbott caved in left most in little doubt about who really governs this country.
From The Land (5/5/14):
‘Correspondence leaked to the ABC between top mining executives warned of a “profound” political impact from cuts to the diesel rebate, greater than that faced by Labor with the mining tax. The letters showed the government faced a potentially damaging fight with the nation’s biggest mining firms over the rebate.’
According to The Australia Institute, the fossil fuel industry receives more than $10 billion per year in government subsidies, with the mining industry hogging most of it. The diesel fuel rebate or Fuel Tax Credit Scheme, is worth $4 billion per year. It might have been designed originally for farmers, but the lion’s share goes to the mining industry.
In 2012, nine out of ten people polled voted for the money to be redirected to health and education. But, unless you are one of the powerful business elites, you – sadly – have very little sway with this Government.
Because miners and moguls run Australia.
So we taxpayers will see just our pockets looted to reduce a budget deficit of just 15% of GDP — one of the lowest of any G20 economy. (great table here on national deficit)
Way to go… or so they thought.
Thankfully, as reported recently by Renew Economy’s Giles Parkinson, the AER has started cracking down on rorting. It now requires Victorian network operators to base their expenditure plans on actual usage rather than forecasts. It’s a good start but the regulation system is a complicated one and progress will be slow.
One outcome the energy industry hadn’t counted on was the growth of solar rooftops. The infrastructure profit bonanza started falling in a heap when the public wised up in tandem with the rising power prices. As solar doesn’t need over-priced poles and wires, that’s half the household bill saved for starters.
In a special report on the ABC’s Background Briefing, ‘The Price of Power’, The Australia Institute’s DrRichard Denniss explained solar’s “trick” to reporter Jess Hill:
“Solar rooftops are wreaking havoc on the traditional power industry, because they produce the most amount of energy at the time of day when the power industry makes the most money.”……….
1 This month
of the week – Disrupting War & Militarism in Oceania. Active solidarity. Radical practice.
Antinuclear 