Uranium production and exploration have declined as the price of the material has languished, and while sufficient resources are available to meet expected increases in demand, stronger market conditions are needed to ensure timely supply in the future, the International Atomic Energy and the OECD?s Nuclear Energy Agency said Thursday in a report.
The IAEA/NEA report, known as the "red book," is issued every other year.
"[T]he coming challenges are likely to be those associated with constrained investment capabilities, as a result of depressed market conditions," the groups said in the report.
Global uranium production declined in 2017 to 59,342 mt of uranium content, the first decrease in three years, the groups said. Increases in 2015 and 2016 were mainly the result of increased production in Australia, Canada and Kazakhstan, the world's largest producers.
But uranium production is expected to decline further in 2018 as companies in Canada and Kazakhstan have announced production cuts as a result of low uranium prices.
Kazakhstan was the world?s largest uranium producer by far in 2016, according to the IAEA and NEA. The 24,689 mtU produced in that country in 2016 was more than the production of Australia and Canada combined, the report said.
The decline in the price of uranium from 2014 to 2016 resulted in a sharp drop in domestic spending on uranium exploration and mine development, IAEA and NEA said in the report. Such expenditures were $663.7 million in 2016, down from $2.12 billion in 2014. The spending is expected to decline further in 2017, according to preliminary numbers in the report.
Some of the decline was the result of a high level of mine development spending in 2014 associated with the Cigar Lake mine in Canada and the Husab mine in Namibia, which were coming online at that time, the organizations said. But spending declined in a number of countries, they said.
"The decline in exploration and development expenditures for this reporting period reflects an adjustment within the industry in response to oversupply, which began with the depressed uranium market in the middle of 2011," the IAEA and NEA said.
Uranium prices fell in 2016 and 2017, but have gained about 20% during 2018. The average price of uranium in 2016, based on the mid-point of the Platts Forward Uranium Indicator, was $26.45/lb, down from an average 2015 price of $36.93/lb. The price of uranium at the start of 2018 was $23.75/lb, according to market participants. Platts assessed the spot price of U3O8 at $29.10/lb December 7 based on the mean of activity for delivery in the coming 12 months.
Uranium demand is expected to continue to rise "for the foreseeable future," although the exact amount of uranium that will be needed in the future is uncertain, the groups said. Global nuclear capacity could decline in the European Union and the US, as deregulated power markets do not provide an incentive to build or retain nuclear power plants, they said. However, uranium demand is expected to climb in east and south Asia as well as the Middle East, they said. Overall, uranium demand in 2035 could be as low as 53,000 mtU and as high as 90,820 mtU, IAEA and NEA said.
The market is "currently well supplied" and production capacity is available to satisfy demand levels in the future, but "significant investment and technical expertise will be required to bring these resources to the market," IAEA and NEA said.
