Dr. Adrienne Hanly of the International Atomic Energy Agency stated recently at the World Nuclear Fuel Cycle conference that inventory levels for uranium fuel for nuclear utilities in the United States hadn’t hit the 2+ years recommended minimum. Hanly, who is a uranium production specialist at the agency, stated that at 16 months’ worth of uranium requirement, utilities in America had limited ability to manage a supply disruption independently.
The specialist’s comments drew the attention of Duncan Craib, the CEO of Boss Energy, who admitted that the company’s inventory levels were low. Craib explained that historically, secondary uranium supplies had filled the gap in the demand for this metal, which wasn’t filled by the primary production of uranium.
However, he continued, the metal’s price had been low, and with the incentive price remaining stagnant, no new mines had been developed, which had, in turn, caused existing inventory levels to reduce. With no new resource discoveries and no new mines being built, Craib stated, the price of uranium needed to increase in order to incentivize new mines to begin production.
This can be seen in uranium’s current spot price of $60 per pound, which increased due to the coronavirus pandemic and Ukraine’s invasion by Russia, compounded with declining levels of uranium inventory.
Russia’s foray into Ukraine not only affected uranium but also natural gas and oil. Currently, Russia accounts for roughly 35% of uranium enrichment internationally, with 16% of this being imported into America.
Additionally, Kazakhstan supplies almost 40% of the global uranium which is shipped from Russia, which means that sanction threats on Russia may directly affect the supply of uranium.
The uncertainty over the security of uranium supply in the future will push the price of uranium even higher, with Craib noting that he believed that worries around security of the uranium supply chain and geopolitical instability were good for new uranium projects. This comes as uranium players around the globe plunge into the field once more.
Craib added that mines in uranium-favorable environments would be prioritized, adding that Boss Energy was well positioned to take advantage of the rising market of uranium.
Earlier in March, Boss Energy released the FEED study on the restart of its million dollar Honeymoon mine, which is located in South Australia. The study demonstrates a 47% internal rate of return of uranium’s spot price of $60 per pound. Craib advised investors to examine all sector players with proven uranium experience on their teams before investing.
This resurgence of uranium may provide the needed spark to expand the operations of domestic extraction firms like Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR).
NOTE TO INVESTORS: The latest news and updates relating to Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) are available in the company’s newsroom at http://ibn.fm/UUUU
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