The Uranium Market

In early 2003, the price of uranium was approximately $10.75 per pound. By early 2007, the price had risen to approximately $90.00 per pound. Driving this demand is the renaissance of nuclear power, seen as a clean, reliable, base-load generating technology. Growth in energy needs, primarily from China and India, combined with environmental concerns over energy produced from fossil fuels is expected to continue to push future demand for nuclear power even higher. According to experts there are approximately 443 nuclear reactors currently in operation supplying 16% of the world’s electricity. With another 250 nuclear reactors under construction, planned or proposed, the demand for uranium is expected to increase significantly from the current 170 million pound range to the 250 million pound range by 2030. 

On the supply side, the flooding of multiple projects, caused a significant delay in timing of future and existing uranium production. Global uranium production in 2006 was roughly 100 million pounds and according to some sources production is expected to increase by 15% in 2007. The current short fall between supply and demand is being filled by secondary sources of uranium that are quickly depleting. Unless a significant number of additional mines are brought to production soon, energy analysts predict a global uranium shortage over the next decade and beyond.

Source:
World Nuclear Association, World Nuclear Power Reactors 2005-07 and Uranium Requirements

Demand growth is being driven by 48 nuclear reactors under construction and the proposed additions of 414 GWe, potentially doubling the uranium demand by 2030.

High energy prices globally, mounting environmental pressure and positive government policies are currently key uranium market drivers, as well as a supply that is challenged to meet shortfall by labour, infrastructure, financial costs and regulatory bottlenecks.  Stronger prices will be needed to support new production*.

Source: 
Ux Consulting, WNA, Wall Street Research