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Global Outlook Is Favorable
The Organization for Economic Cooperation and Development and the International Atomic Energy Agency believe uranium supplies are adequate to meet the needs of nuclear power plants worldwide, as well as new reactors anticipated in the next decade. The agencies base their conclusion on official projections from 40 countries. Currently, uranium is mined in 20 countries, according to the agencies.

“The uranium market has demonstrated recent strength, with major new investments and expenditures for exploration increasing more than 254 percent over the two-year period from 2004-2006,” the agencies said. “Over $774 million was spent globally on exploration in 2006.”³

In the United States, exploration expenditures in 2007 totaled $50.3 million, a 116 percent increase over 2006.⁴

Today’s higher prices for uranium are slowly revitalizing the fuel supply market. This period of rising prices follows a much longer period in which uranium sold at prices as low as $10 per pound—too low to sustain investment in new mines. Companies that could scarcely afford to stay in business several years ago now are able to invest in new mines and facilities. The downturn in U.S. uranium mining was dramatic. U.S. mine production of uranium peaked at 44 million pounds in 1980.⁵  By 1993, it had dropped to 2 million pounds.

Tracking Uranium Prices
The spot price of uranium has shown substantial volatility during the past few years, driven more by perception and speculation than by the realities of supply and demand. In 2006, the spot price doubled from $36.25 per pound to $72 per pound. In 2007, spot prices at times exceeded $100 per pound. In 2008 the price retreated to the $50 per pound level.

In the United States, most uranium is purchased under long-term contracts. The U.S. Energy Information Administration reported that the owners and operators of U.S. nuclear power plants purchased 51 million pounds of uranium in 2007 at a weighted-average price of $32.78 per pound. Of that total, 13 percent was purchased under spot contracts at a weighted-average price of $88.25 per pound U3O8e (uranium oxide equivalent). The remaining 87 percent was purchased under long-term contracts at a weighted-average price of $24.45 per pound.

Higher uranium prices have prompted all the major fuel supply companies and some 400 new firms to expedite efforts to identify and mine more of the material. Only a fraction of the new firms are likely to establish commercially viable mines, but their interest and their investment in the material attest to a dynamic market. Globally, companies spent $774 million on exploration in 2006—nearly six times the amount spent in 2004. Expenditures in 2004 ($133 million) were up 40 percent over those in 2002.⁶

However, the infrastructure cannot rebound as quickly as uranium prices. The OECD and IAEA reported in “Uranium 2007” that global production dropped 6 percent during 2005 and 2006. The agencies noted significant production increases in Kazakhstan and the United States.

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³ “Uranium Report: Plenty More Where That Came From,” news release, June 3, 2008, OECD/IAEA.
⁴ U.S. Energy Information Administration.
⁵ “Uranium Industry Annual 1992,” U.S. Energy Information Administration, October 1993.
⁶ “Uranium 2007: Resources, Production and Demand.”