Key Issues

Uranium Fuel Supply Adequate to Meet Present and Future Nuclear Energy Demand

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Uranium Price Reaches New High
The spot price of uranium has increased 1,000 percent since 2000,² driven more by perception and speculation than by the realities of supply. In 2006 alone, the spot price doubled from $36.25 per pound to $72 per pound. In 2007, prices at times exceeded $100 per pound but, as of Feb. 4, 2008, Ux Consulting Co. reported the weekly spot price for U₃O₈ at $75 per pound.

This period of rising prices follows a much longer period in which uranium sold at prices too low to sustain investment in new mines and conversion and enrichment facilities. Today’s higher prices are slowly revitalizing the fuel supply market. Companies that could scarcely afford to stay in business several years ago now are able to invest in new mines and facilities. 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 $133 million on exploration in 2004—a 40 percent increase over 2002 expenditures. In the United States, for example, exploration expenditures amounted to “much less than” $1 million in 2002. By 2004, that figure had risen to more than $10 million.³

However, the infrastructure cannot rebound as quickly as uranium prices. World production of uranium has increased only 16 percent since 2000,⁴ largely owing to the long lead time to develop new mines and other fuel-cycle facilities. For example, a typical mine requires about 10 years of development before it begins producing commercially. However, the utility industry is confident that the fuel supply industry will respond to the increasing demands of the market. In addition to the ongoing exploration for new uranium deposits, some existing deposits now are economic to produce, given the much higher price that the metal can command in the market.

“Resource totals, on balance, increased between 2003 and 2005, indicating that increased uranium prices have already begun to impact resource totals, principally through re-evaluation of existing resources,” according to the OECD/IAEA report. “However, the recent dramatic increase in exploration expenditures can be expected to lead to further additions to the uranium resource base, just as periods of heightened exploration efforts in the past have done.”

There are about 4.7 million tons of identified resources of uranium that companies can mine for less than $130 per kilogram ($50 per pound U₃O₈), according to the OECD/IAEA report. At 2004 nuclear generation rates, that would be enough to supply the world’s reactors for 85 years. More efficient fast reactors could extend that period to more than 2,500 years. However, total world resources of uranium are much higher—some 35 million tons, according to the OECD/IAEA report.

In addition to traditional uranium deposits, the U.S. Department of Energy has a stockpile of uranium that it could release to the market if needed. This is one of the “secondary sources” of uranium, which also include excess commercial inventories, the expected delivery of low-enriched uranium from U.S. and Russian warheads, re-enrichment of depleted uranium tails (byproducts from enrichment operations), and possible reprocessing of used nuclear fuel.

Uranium also is available from non-conventional sources, such as the recovery of uranium byproduct from other metal mining (e.g., from copper mining in Utah), phosphate fertilizer mining (e.g., Florida, Morocco and Brazil) or gold mining (e.g., South Africa, where millions of tons of gold mining tailings are being processed for their uranium contents). As an example of the potential value of these sources, worldwide phosphate deposits contain about 22 million tons of uranium.

The World Nuclear Association (WNA) notes that estimates of mineral and metal resources are, of necessity, based on current knowledge, which is limited. “Changes in costs or prices, or further exploration, may alter measured resource figures markedly,” states WNA. “At 10 times the current price, seawater might become a potential source of vast amounts of uranium. Thus, any predictions of the future availability of any mineral, including uranium, which are based on current cost and price data and current geological knowledge, are likely to be extremely conservative.”