Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
China and other countries in Asia and elsewhere are pressing ahead with building atomic energy plants, which are fuelled by refined uranium.
French nuclear engineering group Areva SA said Monday depressed uranium prices are set to rebound and that, when they do, it will happen “quite fast.”
Speaking on the sidelines of a conference on uranium in Vienna, the company’s senior vice president, marketing, Isabelle Leboucher told Reuters there still are uncertainties, as the firm doesn’t know how fast uranium demand will grow in coming years.
However, the message to investors was as upbeat as clear: The short-term outlook is bad, but don’t worry, a lot more uranium is going to be needed down the road, as plants are being built in China and elsewhere.
RBC Capital Markets Analysts agree, but think it will be a much longer road than most. While they are forecasting a price of $31.50/lb this year and $40 for 2015, they slashed their forecasts for 2016 to 2018 to between $40 to $45/lb, amid expectations that the uranium market will be in surplus until 2021.
Uranium prices have crashed since the Fukushima incident in 2011, losing a further 30% in the last year to hit new record lows a few weeks ago. Although there’s no spot price for the metal, UX Consulting’s most recent indicator, published June 16, came to $28.5 a pound, down 31% over the last 14 months.
In May, Areva agreed to a tax breaks cut and a royalty rates hike at its uranium mines in Niger, adding the start of production at its giant new Imouraren mine would be delayed until prices improve.
The state-controlled nuclear giant is currently being investigated over the controversial 2007 purchase of a Canadian uranium miner UraMin. The probe focuses on the $2.5billion Areva’s acquisition of UraMin, carried out at a height of demand for enriched uranium, which it later had to write-down.
