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China’s unquenchable thirst for uranium is driving a renaissance of the market and is likely to pull the global U-sector out of its current doldrums and drive much-needed price increases.
Addressing the third and final day of the Paydirt 2016 Africa Down Under mining conference in Perth today, Bannerman Resources’ Managing Director and Chief Executive Officer, Mr Brandon Munro, said the nuclear industry was experiencing unprecedented growth through China’s burgeoning energy expansion.
“Now is one of the most compelling times in the cycle for high growth investment in the uranium plays,” Mr Munro told delegates.
“It is widely accepted that current decade-low uranium prices are unsustainable and will increase,” he said.
“The nuclear industry is experiencing unprecedented growth through China’s expansion – the likes of which have not been seen before.
“This has been supported by further strong non-OECD growth fuelled by Russia and India.
“Uranium is a key source of clean, base load power seeing solid growth profile in the OECD.
“Those factors all merge to suggest a looming supply shortfall in the market with potential short term catalysts.
“This includes very few uranium development projects of scale ready to respond.
“All of which points to an abrupt and sustained uranium price correction, which has a very similar dynamic to 2005.”
ASX-listed Bannerman Resources owns the Etango Uranium Project in Namibia – one of the world’s largest undeveloped uranium projects.
The Etango Project is near Rio Tinto’s Rössing uranium mine, Paladin’s Langer Heinrich uranium mine and CGNPC’s Husab uranium mine currently under construction.
Etango is one of the few uranium projects in the world with a completed Definitive Feasibility Study (DFS) and environmental permitting and will is expected to be a top 10 producer once developed.
“The current global uranium market is currently in a state of surplus, but this is only because of secondary supply,” Mr Munro said.
“In fact, mine production is insufficient to meet utility reaction demand,” he said.
“Current spot demand is very low as utilities’ inventories are sufficient, putting current downward pressure on producers selling into market.
“There is also a low level of term contracting as producers remain unwilling to contract at low prices and utilities are unwilling to contract at big premiums.
“Factor that in with China’s ‘ambitious’ nuclear growth plans which will need to be substantially exceeded.
“That makes China’s current stockpiles and production inadequate for growth plans.
“Which all means future supply requirements are compounding – and making it a compelling time in the cycle for high growth uranium investment.”
