Red Book sees production capacity as future uranium challenge

Developing production capacity to meet the world's uranium needs, rather than the availability of uranium resources, is a likely challenge over coming years according to the latest edition of the OECD Nuclear Energy Agency (NEA) and International Atomic Energy Agency (IAEA) joint report on uranium resources, production and demand.

Known as the Red Book, Uranium 2016: Resources, Production and Demand was published on 30 November. It is the 26th edition of the report, currently updated every two years, and provides a reflection of information current as of 1 January 2015. The report provides analyses and information from 49 uranium producing and consuming countries based on official data from 37 countries and national reports prepared by the NEA and IAEA on a further 12. As well as assessing uranium supply and demand in 2015, it includes projections to 2035.

The report identifies total (reasonably assured and inferred) uranium resources of 5,718,400 tU recoverable at costs of up to $130 per kgU - down 3.1% on the January 2013 figure. Taking its highest cost category of up to $260 per kgU, total identified resources were found to be 7,641,600 tU, which is 0.1% higher than the total reported for 2013.

A 10% increase in overall worldwide uranium exploration and mine development expenditures since the previous Red Book could largely be attributed to development activities at only two projects: Cigar Lake in Canada, and Husab in Namibia. Exploration expenditures themselves continued to decrease because of low uranium prices, the report found, and no significant resources were added to the resource base during the reporting period.

The highest exploration and development expenditures in both domestic and non-domestic projects over the reporting period were by China, with a steady increase in domestic exploration expenditure from $131 million in 202 to $197 million in 2014 and an expected $199 million in 2015. Brazil, the Czech Republic, Jordan, Mexico and Turkey also reported increased expenditure on domestic uranium exploration and development during the period. China's non-domestic exploration and development expenditure - principally through investment in the Husab mine in Namibia - rose from $82 million in 2012 to $753 million in 2014 and an expected $778 million in 2015. Total world non-domestic uranium exploration and development expenditure was found to be $813 million in 2014 and an expected $846 million in 2015.

Uranium production, at 55, 975 tU as of 1 January 2015, was 4.1% down from the previous report, with Kazakhstan, the world's leading producer, continuing to increase production but at a slower pace than before.

Growing demand

Demand for uranium is expected to continue to rise "for the foreseeable future", the report found. Taking into account policy changes and revised nuclear development plans announced in some countries, the report projects world nuclear capacity to grow to between 418 GWe, in its low demand case, and 683 GWe, in its high demand case, by 2035. Accordingly, annual reactor-related uranium requirements are projected to rise from 56,585 tU as of 1 January 2015 to between 66,995 tU and 104,740 tU by 2035.

Although total identified uranium resources have only increased by 0.1% since the previous edition of the report, the currently defined resource base is "more than adequate" to meet even high-case uranium demands to 2035. Whether it will do so will depend on "timely investments to turn resources into refined uranium ready for nuclear fuel production," the report finds.

High levels of oversupply and inventories, resulting in "continuing pricing pressures", present challenges to the global uranium market, the report notes. Other concerns in mine development include geopolitical factors, technical challenges and "increasing expectations" of governments hosting uranium mining, it says.

Uranium miners responded "vigorously" to market signals of increased prices and projections of rising demand prior to the Fukushima Daiichi accident, but the continued decline in uranium market prices following the accident and "lingering uncertainty" about nuclear power development in some countries has led to reduced uranium requirements, depressed prices and slower mine production and development. While this situation may be temporary, "significant investment and technical expertise" will be needed to make resources available.

"Producers will have to overcome a number of significant and, at times, unpredictable issues in bringing new production facilities on stream, including geopolitical factors, technical challenges and risks at some facilities, the potential development of ever more stringent regulatory requirements, and the heightened expectations of governments hosting uranium mining. To do so, strong market conditions will be fundamental to bringing the required investment to the industry," the report says.

The overall time frame for mine development should be reduced if market conditions warrant renewed development activity, the report notes. "The current global network of uranium mine facilities is, at the same time, relatively sparse, creating the potential for supply vulnerability should a key facility be put out of operation," it warns. Inventories built up by utilities over recent years at reduced prices should help to protect them from such events, it says.

Researched and written
by World Nuclear News