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Yellowcake Fever: exposing the uranium industry's economic myths (Jim Green)

Nuclear Monitor Issue: 

Author: Jim Green, national nuclear campaigner with Friends of the Earth, Australia, and co-author of the 'Yellowcake Fever' report.

As an example of industry propaganda, the Australian Uranium Association's Executive Director Michael Angwin claims that Australia "has enough reserves to be to uranium what Saudi Arabia is to oil". However Australia's uranium export revenue of A$642 million in 2011 was 466 times lower than Saudi oil revenue in the same year. Australia would need to supply entire global uranium demand 31 times over to match annual Saudi oil revenue!

Uranium accounted for just 0.29% of Australia's export revenue in the 10 years from 2002−2011. The figure is still more underwhelming considering that the four companies mining uranium in Australia are all either majority foreign owned or 100% foreign owned; in other words, a sizeable proportion of that export revenue never comes anywhere near Australia.

Uranium mania reached its zenith in the mid-2000s due to a spectacular speculative price bubble which saw the spot price peak at US$138 / lb U3O8 in June 2007. Since the bubble burst, the uranium industry has been battered from pillar to post as a result of falling prices, the Global Financial Crisis, the failure of the nuclear power 'renaissance' to materialise, and serious problems and production shortfalls at numerous operating mines.

Since March 2011 the punch-drunk uranium industry has had to deal with the fallout from the Fukushima disaster in Japan. In 2006, The Bulletin magazine spoke of a "radioactive heaven" whereas in late 2011 The Australian newspaper said the sector is doing a passable imitation of Death Valley.

A major constraint is the modest size of the global market for uranium. If all secondary supply is bundled into the primary market, and lower spot prices are ignored, the figure just reaches US$10 billion annually:

2011 production

64,402 t U3O8 (142 million lb)

2011 contract price

US$60/lb U3O8

Value of 2011 production

US$8.52 billion

Value of total 2011 requirements (production met 85% of requirements)

US$10.0 billion


With nine countries producing over 1000 tonnes of uranium annually and 10 countries producing smaller quantities (2011 figures), uranium doesn't make a significant contribution to any country's national export revenue. If there was an exception to that point, it would be Kazakhstan − the world's largest uranium producer. But uranium accounted for just 3.4 percent of Kazakhstan's export revenue in 2011. (35.6% of global production, estimated uranium revenue US$3.0 billion, national export revenue US$88.5 billion.)

Australia has around 31% of the world's known recoverable uranium resources (to US$130/kg U). However a majority of that uranium is in one location − BHP Billiton's Olympic Dam mine in South Australia. Last year, BHP Billiton cancelled a planned mega-expansion of Olympic Dam (uranium production was to increase to 19,000 tonnes annually), disbanded its Uranium Division, and sold the Yeelirrie uranium lease in Western Australia for about 11% of the nominal value of the resource. Also indicative of the state of the industry was Cameco's announcement in February of a A$162.5 million write-down on the Kintyre project in Western Australia.

The Australian uranium industry has a long history of promising great economic benefits and failing to deliver. Academic Richard Leaver from Flinders University writes: "'Potential' is one of the most powerful chemicals available to the political alchemist. Any individual, firm, or sector deemed to have potential is relieved of a massive and perpetual burden − the need to account for past and present achievements (or, more probably, the lack of them). ... The history of Australian involvement in the civil uranium industry offers an excellent example of this alchemy at work."

The 'Yellowcake Fever' report notes that in addition to industry propaganda, governments routinely inflate the significance and potential of the uranium industry, as do industry 'analysts' (some of them market traders), so-called business journalists and some academics.

There are real-world consequences to this propaganda − many small investors have been burnt. That problem was most acute during the speculative price bubble in the mid-2000s when small investors were spending big on penny dreadfuls while at least three major utilities were selling shares in Rio Tinto-controlled Energy Resources of Australia.

As journalist Tim Treadgold wrote in the West Australian in 2005, "smart money" was selling "while less clued-up people continue to buy uranium penny dreadfuls rather than do something sensible, like bet the house (the wife and the kids) on the horse carrying the jockey wearing pink polka dots in the fourth at Ascot next Saturday."

More broadly, and more importantly, the widespread misconception that uranium mining is − or could be − a major contributor to national economies distorts rational assessment of the costs and benefits of the industry.

'Yellowcake Fever: Exposing the Uranium Industry's Economic Myths' is posted at


Uranium Price Drops
FNArena News reported that participants at the World Nuclear Fuel Cycle conference in Singapore earlier this month hoped that the conference itself would ignite an increase in uranium trading but "the exact opposite is what ended up happening." Talk of new problems with Chinese import licenses was one concern, and uranium spivs were unsettled by a JP Morgan report that the Japanese nuclear regulator might impose "stringent" safety standards on nuclear power utilities. Heaven forbid. JP Morgan believes that 2-3 reactors will restart this autumn in Japan, which would only offset the closure of the Ohi plant in September.

Currently the spot price is just above US$40 / lb U3O8.
Canadian company Cameco saw net earnings drop 93% in the first quarter of 2013. While reporting a 5% fall in revenue to C$444 million, Cameco said that net earnings for the first quarter of 2013 were C$9 million, a 93% drop from the figure for the first quarter of 2012. Gross profit fell 37% during the quarter to C$95 million.

Regarding the uranium industry, Cameco said: "Near- to medium-term uncertainty continues to impede a recovery, with neither buyers nor suppliers seeming to feel much pressure to contract. Most suppliers have significant commitments out to 2016, and utilities are well covered for a similar period." Uranium spot prices remained at a level "well below that required to incentivize new projects." (World Nuclear News, 2 May 2013, 'Cameco awaits market pick-up',