The future of uranium: Can I have some yellowcake please?
Uranium has long been considered the bogeyman of the energy industry, but with the election of Donald Trump and Kazakhstan’s plans to curb supply, times may well be changing for this controversial commodity.
The years that followed the Fukushima disaster in 2011 have been difficult for nuclear power. Fukushima cast a shadow over the desirability of the world’s reliance on this environmentally-friendly, carbon-dioxide free energy source. By November 2016 the price of uranium had fallen to its lowest level in twelve years due to continued oversupply and a reduced appetite for yellowcake (milled uranium oxide).
Despite its controversial image, many would be surprised to learn that in 2015 nuclear energy contributed to more clean energy in the U.S. than hydro, wind, biomass, solar and geothermal energy combined. Nuclear energy does not emit air pollution, isolates waste from the environment and only requires a relatively small amount of land. Therefore as long as reactors are operated safely, nuclear energy has one of the lowest impacts on the environment of any energy source.
These impressive credentials have not gone unnoticed, with U.S focused miner, Energy Fuels, recently announcing that China is currently constructing 20 nuclear reactors (to add to the 35 they have already) and has plans to build a further 177. With India announcing its plans to build an additional 60 reactors, these may be the trappings for future growth in the demand for uranium.
With President Trump voicing support for nuclear energy and expressing a desire to expand the U.S.’s nuclear arsenal, the viability of many previously uneconomic projects may be a thing of the past. Further, inflationary pressure comes from an announcement made by the world’s largest uranium supplier that it will curb supply by as much as 10%. The shift in Kazakhstan’s primary focus on margins as opposed to market share resulted in a price surge in the fourth quarter of 2016, a trend which may well continue over the course of 2017.
Given that Africa accounts for 18% of the global supply of uranium, with the largest known recoverable deposits located in South Africa, Niger and Namibia, mining companies may soon be choosing to revisit previously shelved projects. Renewed optimism has already led some investors to return to the market, with Peninsula Energy recently announcing its plans to develop an area of over 7,000 square kilometres in northern South Africa. Other African mining companies used 2016 as an opportunity to consolidate and restructure their balance sheets to take advantage of future price hikes. With the early signs of a recovery on the horizon, 2017 may well be the year of increased nuclear energy investment across Africa.
The Inside Africa team would like to thank India Furse, Trainee, for her contribution to this blog post.