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7/20/10

Uranium

This humble corner of cyberspace has noted that one of the periodic (geddit?) upturns in the hype that gets thrown at Uranium is underway again, with chatter on how China is "stockpiling like crazy" and chartists pointing to a tiny eensy weensy little recent upmove in the spot price of the stuff and calling it a "breakout". Yeah right. I'm yet again reminded of how studying charts is much easier than learning.

Talking of charts here are a couple of my own, generated from data supplied by those nice (and industry standard benchmark reliable) people at the World Nuclear Association. First up is the production of U (not U308, but actual tonnage of the metal which is lower) in the period 2003 to 2009. The main takeaway here is that, unbeknown to many, there's been a pretty decent pop in production recently. Last year saw North of 50KMT produced, which supplied 76% of the world market for U (breeder/reprocessor reactors and old nuke warheads make up a lot of the gap, which is pretty normal).

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So in passing let's check on the company breakdown of U production, where we see that in 2009 just ten companies supplied 89% of the world's mined uranium. That's a concentrated market, people.

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So now to the main point of this post. The chart below is a kind of composite thing and needs a bit of explanation. Firstly, we have the total mined production of U for 2003 to 2009. Then we have the WNA forecast for U production in 2010, as this year that body expects another 5kmt or so to be added to last year's big supply hike and around 55,000MT produced. On researching for this note I've seen estimates as high as 57,000MT in fact, but let's go with this world body number as our benchmark.

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The third thing to note is that end column for the year 2015. This is a separate calculation and based on the WNA upper forecast for uranium demand in 2015. Again, there are forecasts and forecasts but we're going with an upper limit number of 77,000MT demand for U in that year, according to people that follow the industry very closely indeed. From that, we assume that mined uranium accounts for 80% of supply for that year (recall, in 2009 it was 76% and that was a high number relative to previous years too) which brings us to our projected needed supply from mines of 61,600MT.

The point of adding that last 2015 column is to show that there's no real big supply problem in the works here. Normal run-of-industry expansion between now and then needs no stretching of the imagination to supply what will be needed. Especially when you consider things like the recent Ukrainian decision to decommision a pile of its nukes, or trifles such as the brand new uranium mine being built by Areva in Niger that'll be good for 5000 tonnes per year as from 2012 onwards.

The bottom line is that there's seemingly no supply squeeze on the horizon and it doesn't matter what the market shillers might think. Uranium gets pumped to no result from time to time and this time seems no different, just the reasons ("OMG!!! Chinese Stockpiling!!!") change. DYODD, dude.

UPDATE: Welcome biiwii readers! If you're wondering what to get Gary for Xmas this year, here's a great gift idea.