http://www.miningweekly.com/page/home
TORONTO (miningweekly.com) – Uranium is back on the radar for many in the Canadian investment community. At first glance, this might seem counterintuitive: effective September 2, the uranium oxide spot price stood at $34/lb, while short-term market sentiment remains muted.
But uranium marches to a different, longer-term beat. Bullish analysts and commentators highlight wider macro factors that will eventually act as key supports for output, spot prices and fixed-term supply contracts. Canada is poised to reap great rewards as the world’s second-largest producer of uranium, they argue.
However, others urge caution; long-term macro expectations have the nasty habit of falling flat, while the junior spectrum – so critical for broadening the pipeline of available projects – continues to suffer from strong economic headwinds. Then there is the question of the possible effect that Quebec’s moratorium on uranium exploration and exploitation may have.
Canada’s two main uranium producers are Cameco and Areva, and both have significant footprints in the prolific Athabasca basin region of northern Saskatchewan.
Cameco expects global consumption to rise from 170-million pounds to 220-million pounds by 2022, with the global reactor fleet increasing from 430 to more than 520 by 2022. China accounts for 28 of the new reactors planned or already being built.
With trade deals now in place, Chinese uptake for Canada-produced material is likely to be great and Cameco is already in discussions with various utility companies. “For the first time, we expect to deliver Canada-origin uranium this autumn,” Cameco senior VP and chief communications officer Ken Seitz said during the company’s mid- August second-quarter results conference call.
Many of Cameco’s views were mirrored by World Nuclear Association senior project manager Ian Emsley. “Under our central scenario, things will pick up pretty quickly to 2020 and then accelerate even more after that. But projections into the future cannot be considered as cast-iron guarantees of course,” he told Mining Weekly.
“China wants to be a leader in nuclear power generation,” he added. “Reports indicate they are making good progress and we’ve no reason to doubt their ambitions in this regard. We believe they’ll be building about half of the additional new reactors in the world for the next 15 or 16 years.”
Commentators also stress the ending by the close of 2013 of Russia’s programme to supply material obtained through reprocessing high-enriched uranium, as a further macro bonus. This will represent the withdrawal of around 24-million pounds of uranium, according to Cameco.
Another support will come from potential supply squeezes as demand grows and new projects take time to bring on stream. “[Project development] takes seven, eight, nine years. So the longer we wait for the signal to bring on new production, the longer it will be at the other end when we bring it on,” Cameco president and CEO Tim Gitzel said on a conference call.
For the rest of this article, click here: http://www.miningweekly.com/print-version/canadian-uranium-sector-prepares-for-rising-tide-but-developments-in-quebec-worrying-2013-09-20-1