Mar 24 Uranium week: Taking its toll

Weekly Reports |Mar 24 2020

The virus is having its impact on the uranium industry, sending the spot price under US$24/lb for the first time since July 2018

-Virus impacting on electricity producers-And on mining operations-And on project development-And on credit availability

By Greg Peel

The US government considers power plants part of the nation's critical infrastructure, and to that end electricity producers are preparing to retain key personnel at operation centres to ensure facilities remain online. Exelon, operator of the largest fleet of nuclear reactors in the US, expects to operate under a "pandemic preparedness plan" through to the end of the northern summer.

In Europe, nuclear power availability is expected to remain robust with strict safety measures already being implemented by major plant operators. EDF Energy, operator of all of the UK's fifteen commercial reactors, has plans in place to maintain operations.

In the spot uranium market, sentiment took on a bearish tone last week, industry consultant TradeTech reports, due to the virus. Fear has now spread from equity markets into credit markets, thus despite interest rates at historic lows, uncertainty is making it more difficult for some parties to lock in rates or commit to fixed prices for material further into the future.

Meanwhile, as the end of the first quarter approaches, a number of sellers are concerned about concluding sales before end-March. As a result, spot uranium prices softened last week and the weekly spot price dropped.

On the Slide

Eleven transactions totalling 1mlbs U3O8 equivalent were reported in the spot market. TradeTech's weekly spot price indicator fell -US15c to US$23.95/lb to mark the first time the price has fallen below US$24/lb since July 2018.

The spot price has resided in a narrow US$2 band for most of the last two years. The last time the price exceeded US$26/lb was in November 2019.

TradeTech's term price indicators remain at US$28.25/lb (mid) and US$33.00/lb (long) with no new transactions.

The virus is also impacting the supply side. Kazakhstan's Kazatomprom said last week the virus presents a risk to its remote production sites, while noting an ability to utilise stocks of up to 22.1mlbs U3O8 to bridge potential shortfalls in output.

Texas-based Uranium Energy Corp announced a delay to exploration activities at the company's Burke Hollow Project, while Canadian-based Denison Mines Corp said it would temporarily suspend activities related to the environmental assessment for its Wheeler River Uranium Project.

The virus does not discriminate.

Life Goes On

California-based Oklo Inc last week submitted the first combined license application for an advanced reactor to the US Nuclear Regulatory Commission, TradeTech reports. Oklo's application represents a milestone for the industry, as the company also pioneered a modernised and novel application structure for advanced fission technologies.

Oklo's application for its Aurora micro-reactor is also the first privately-funded application for a commercial advanced reactor. Last year, Oklo received a first-of-its-kind site use permit to build its Aurora plant at an Idaho National Laboratory (INL). In February, it also became the first modern advanced reactor design firm to secure access to recycled nuclear fuel from INL for demonstration purposes.

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