Uranium production cuts to support higher prices

PHILLEPUS UUSIKUThere exists a negative relationship between uranium production output and prices. This implies that when uranium output increases, prices fall and when output fall, prices rise.According to PSG, the uranium spot price seems to have stabilised at around US$30/lb (pound), after floundering between US$17/lb and US$29/lb for the past four years.This period of depressed uranium prices collapsed what was supposed to be a boom in Namibian uranium exports after the completion of the Husab mine, the biggest open-pit uranium mine in Africa in 2016.The push to US$30/lb is mainly thanks to major producers Cameco and Kazatomprom cutting production to boost prices as well as temporary coronavirus-induced mine closures.However, there are also signs of an improvement in uranium market sentiment, which could translate into significantly higher prices and the fruition of domestic mine start-ups and mine reopening.Currently there are only two operational uranium mines in Namibia, namely Husab and Rössing, both in the Erongo region near Swakopmund, PSG pointed out.Two more mines are under care and maintenance, namely Langer Heinrich and Trekkopje. The former has completed a US$81m restart plan and awaits an improved price environment to secure offtake partners. Namibia also has several ongoing uranium exploration projects, which could start producing when the long-term uranium price increases above US$50/lb.ProjectionsAnalysts and traders are confident that prolonged mine closures and production cuts by the major producers Cameco and Kazatomprom will soon push the global uranium into a deficit that will support higher prices.Furthermore, the uranium bulls believe that policymakers are regaining interest in nuclear technologies as the Paris Agreement on climate change comes into focus.Several of the world’s leading economies have recognised that nuclear energy has to be a key part of their future energy mix in order to meet ambitious aims of becoming ‘carbon neutral’ by the second half of this century, PSG said.In this regard, the new US President Joe Biden has recommitted his country to the Paris Agreement and his administration is expected to support the lifetime of US nuclear power plants to replace the baseload ageing coal plants. The US is also expected to continue to support the development of the nascent small modular reactors (SMR) industry, while Biden’s support for the muted US strategic uranium stockpile is more tenuous, PSG added.

Uranium production cuts to support higher prices

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Republikein 2025-05-01

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Uranium production cuts to support higher prices

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