Uranium Set to Have its Day
COMMODITY CAPERS: Uranium remains the under-appreciated Australian commodity despite the global membership badges our domestic industry displays.
Australia is ranked number one in the world for uranium resources, a lot of which still sits unmined.
Be that as it may, we are able to boast being ranked as the fourth largest uranium producer globally with the value of our uranium exports for the year 2023-204 hitting an impressive $1,200 million.
Australia’s uranium exports are currently produced at the Four Mile, Olympic Dam and the newly-opened Honeymoon mines in South Australia.
When the Honeymoon mine kicks in it is anticipated to push up Australia’s uranium export earnings to about $1.3 billion in 2024–25, with exports predicted to hit $1.5 billion in 2025-26.
Exploration for uranium has run rampant this year with uranium miners forking out some $15.2 million on exploration in the June quarter 2024, a healthy rise on the $3.4 million spent in the March quarter 2021.
In a recent research note on Paladin Energy (ASX: PDN) broking house ShawandPartners declared its bullish outlook for the uranium market.
“There is not enough supply to meet current demand, let alone increased demand from reactor restarts, new reactor builds and demand from Small Modular Reactors (e.g. Amazon, Google),” it said.
“The long-term contract price is continuing to shift higher each month (currently US$82/lb) and we think it is likely that contracting prices head above US$100/lb.”
Paladin Energy restarted its Langer Heinrich mine in Namibia this year after six years in care and maintenance.
Langer Heinrich is forecast to produce approximately 6Mlb of uranium when in production which is around three per cent of global supply.
“The two main issues impacting Langer Heinrich are the grade of the material on the previously mined stockpiles, and the availability of water from NamWater,” ShawandPartners said.
“Neither of these issues will be a problem post the processing of the stockpiles once production shifts to processing of freshly mined ore.
“Paladin has commented that it expects to reach full production rates of 6Mlb/yr by the end of 2025 as previously expected.”
ShawandPartners highlighted the recent run enjoyed by the spot uranium price through US$100/lb on the back of strong global support for nuclear energy to decarbonise power grids.
This has been heightened by supply constraints being felt by major producers such as Kazatomprom and Cameco.
“In our view the uranium price is likely to continue moving higher with US and European utilities not covered for the fuel requirements from 2026-2028 and limited new supply in that timeframe,” ShawandPartners said.
“It is difficult to see what will cap the upside in the short term.
“We assume a multi-year price spike to US$150/lb, before settling to our long-term U3O8 realised price assumption of US$76/lb (2024 Real) in 2030.”
Uranium will be the main agenda point at the RIU Uranium Investment Day being held at Claremont Football Club next Tuesday 19 November.
For information on the day CLICK HERE