Uranium mining company Cameco announced on April 21 that is suspending production at Rabbit Lake and reducing production at McArthur River / Key Lake in Canada. Cameco is also curtailing production at its two U.S. uranium mines, both in-situ leach mines ‒ Crow Butte in Nebraska and Smith Ranch-Highland in Wyoming. About 500 jobs will be lost at Rabbit Lake and 85 at the U.S. mines. Cameco now expects its total production in 2016 will be 25.7 million pounds of U3O8 (about 15% of global demand), down from its earlier forecast of 30 million pounds.1
"Unfortunately, continued depressed market conditions do not support the operating and capital costs needed to sustain production at Rabbit Lake and the US operations," Cameco CEO Tim Gitzel said. A Cameco statement said that "with today's oversupplied market and uncertainty as to how long these market conditions will persist, we need to focus our resources on our lowest cost assets and maintain a strong balance sheet."
With Cameco's recent announcement, U.S. uranium production in 2016 will likely be the lowest in more than a decade. On April 25, the Uranium Producers of America (UPA) called on the U.S. Department of Energy to stop selling from the federal excess uranium inventory until the market recovers. The Department has been selling more than five million pounds of uranium per year – more than twice what the domestic industry is likely to produce this year according to UPA – to fund the cleanup of contaminated legacy nuclear sites.2
The Department's actions "continue to have a negative impact on the uranium market and the domestic uranium industry" according to UPA, but in fact sales of around five million pounds amounts to just 3% of current annual global demand of 170 million pounds and about 10% of U.S. demand. UPA President Harry Anthony said cleaning up legacy nuclear sites is important but should be funded through the regular appropriations process. He noted that the U.S. imports almost 95% of uranium requirements for power reactors.2
Christopher Ecclestone, mining strategist at Hallgarten & Company, offers this glum assessment of the uranium market: "The long-held theory during the prolonged mining sector slump was that Uranium as an energy metal could potentially break away irrespective of the rest of the metals space. How true they were, but not in the way they intended, for just as the mining space has broken out of its swoon the Uranium price has not only been left behind but has gone into reverse. This is truly dismaying for the trigger for a uranium rebound was supposed to be the Japanese nuclear restart and yet it has had zero effect and indeed maybe has somehow (though the logic escapes us) resulted in a lower price."3
Ecclestone adds that uranium has "made fools and liars of many in recent years, including ourselves" and that "uranium bulls know how Moses felt when he was destined to wander forty years in the desert and never get to see the Promised Land." He states that uranium exploration "is for the birds" because "the market won't fund it and investors won't give credit for whatever you find".
Pro-uranium social media campaign's #epicfail
The Minerals Council of Australia launched a pro-uranium social media campaign on April 20. By that afternoon the twitter hashtag #untappedpotential was trending but ‒ as a mainstream media article noted4 ‒ contributors were overwhelmingly critical.
Nearly all contributors offered thoughts such as these:
"A week away from the #Chernobyl 30-year anniversary and Minerals Council begins propaganda trip on the #untappedpotential of uranium. Huh?!" said Twitter user Jemila Rushton.
"We need to better harness the #untappedpotential of solar power", tweeted Upulie Divisekera.
"#untappedpotential to put more communities at risk of nuclear waste dumps," Ace Collective said.
"We concur that uranium has much #untappedpotential ... for disaster, cost and time blowouts and proliferation," Anglesea After Coal said.
No doubt the Minerals Council of Australia anticipated the negative publicity and is working on the basis that all publicity is good publicity. But what the Minerals Council didn't anticipate is the uranium price has recently fallen to an 11-year low. Mining.com noted in an April 20 article that the current low price hasn't been seen since May 2005.5 The current price, under US$26/lb U3O8, is well under half the price just before the 2011 Fukushima disaster, and under one-fifth of the 2007 peak of a bubble.
Mining.com quotes a Haywood Securities research note which points out that the spot uranium price "saw three years of back-to-back double-digit percentage losses from 2011-13, but none worse than what we've seen thus far in 2016, and at no point since Fukushima, did the average weekly spot price dip below $28 a pound." Haywood Securities notes that an over-supplied market continues to inflate global inventories.
Mining.com notes that five years after the Fukushima disaster only two of Japan's nuclear reactors are back online, and that in other developed markets nuclear power is also in retreat. The last reactor start-up in the U.S. was 20 years ago. The French Parliament legislated last year to reduce the country's reliance on nuclear power by one-third. Germany is phasing out nuclear power. As discussed in Nuclear Monitor #822, the European Commission recently released a report predicting that the EU's nuclear power retreat ‒ down 14% over the past decade ‒ will continue. Even if all of Japan's 43 reactors are included in the count, the number of power reactors operating worldwide is the same now as it was a decade ago.
China is a growth market but has amassed a "staggering" stockpile of yellowcake according to Macquarie Bank. India's nuclear power program is in a "deep freeze" according to the Hindustan Times (unfortunately the same cannot be said about its nuclear weapons program), while India's energy minister Piyush Goyal said on April 20 that India is not in a "tearing hurry" to expand nuclear power since there are unresolved questions about cost, safety and liability waivers sought by foreign companies.6
Nuclear power propaganda
There is no reason to believe that the nuclear industry will break out of its 20-year pattern of stagnation in the foreseeable future. Yet the latest propaganda piece from the Breakthrough Institute claims that "in 2015 the global nuclear sector quietly had its best year in decades" and "in crucial respects the nuclear renaissance has hit its stride".7 How on earth does the Breakthrough Institute reach those conclusions? By celebrating 10 reactor start-ups in 2015 and all but ignoring the eight permanent reactor shut-downs. The shut-downs are relegated to a footnote and completely ignored in the subsequent analysis.
If the latest effort from the Breakthrough Institute is disingenuous, the latest from the World Nuclear Association (WNA) is, well, it's an #epicfail. The WNA has come up with a "vision" for the construction of 1,000 power reactors by 2050.8 What distinguishes this "vision" from the WNA's constant lobbying for massive nuclear expansion? This particular PR campaign has a name: Harmony. In the WNA's words: "Renewables, nuclear and a greatly reduced level of fossil fuel work together in harmony to ensure a reliable, affordable and clean energy supply."
Lest the harmony meme die before it even gets a chance to trend on twitter, the WNA finds different ways to insert the word into sentences that are devoid of merit or meaning. Here's an example: "The harmony of purpose that characterised national nuclear programmes in the early years has to be applied now to the global enterprise."
The targets of 1,000 new reactors and nuclear power supplying 25% of global electricity might seem like ambit claims, but the WNA insists that "a great deal of consideration has gone into them and they were set after extensive consultation with leading nuclear industry figures."
How does the WNA propose to attain harmony? There's nothing new in its rhetoric (except the buzzword): a "level playing field" for all low-carbon technologies, "harmonised regulatory processes", and an "effective safety paradigm".
Former WNA executive Steve Kidd has repeatedly poked fun at vacuous PR campaigns such as the WNA's latest push. For example he said last year: "We have seen no nuclear renaissance (instead, a notable number of reactor closures in some countries, combined with strong growth in China) ... The industry is doing little more than hoping that politicians and financiers eventually see sense and back huge nuclear building programmes. On current trends, this is looking more and more unlikely. The high and rising nuclear share in climate-friendly scenarios is false hope, with little in the real outlook giving them any substance."9
After the COP-21 UN climate change conference last December, Kidd wrote: "The future is likely to repeat the experience of 2015 when 10 new reactors came into operation worldwide but 8 shut down. So as things stand, the industry is essentially running to stand still."10
Laser uranium enrichment takes a hit
The uranium conversion and enrichment markets have been just as depressed as the uranium market. One casualty is Australian company Silex Systems which is reeling from the decision of GE-Hitachi to pull out of Global Laser Enrichment (GLE), a joint venture to commercialize Silex's laser uranium enrichment technology. GLE is a joint venture between GE (51%), Hitachi (25%) and Cameco (24%).11
An 18 April 2016 statement by Silex Systems ascribes GE-Hitachi's decision to changes in business priorities and difficult market conditions. Silex's stock price fell 46% on the news of GE-Hitachi's exit and has remained depressed since.12
In 2012, GLE received a construction and operation licence for a full-scale laser enrichment facility from the U.S. Nuclear Regulatory Commission. GLE was selected by the U.S. Department of Energy to enter contract negotiations on the construction of a laser enrichment plant at the former gaseous enrichment site at Paducah, Kentucky to re-enrich its inventory of depleted uranium tails. Those negotiations are continuing, but the project hit financial hurdles in 2014 and faces even bigger hurdles now. Silex Systems CEO Michael Goldsworthy said in July 2014: "The global nuclear industry is still suffering the impacts of the Fukushima event and the shutdown of the entire Japanese nuclear power plant fleet in 2011. Demand for uranium has been slower to recover than expected and enrichment services are in significant oversupply."13
Responding to the recent announcement, pro-nuclear commentator Dan Yurman said:14
"It is becoming clear that the way to make a small fortune in the uranium enrichment business in the U.S. is to start with a large one. GE-Hitachi has spent millions developing the technology, including successfully building a test loop, and getting a license from the NRC to build a full-scale isotope separation plant in Wilmington, NC.
"GEH is the second major nuclear vendor to exit plans for the business without breaking ground. In 2013 French state-owned nuclear giant Areva suspended plans to build a $3 billion advanced gas centrifuge uranium enrichment plan in Idaho after getting an NRC license and a $2 billion loan guarantee from the U.S. federal government's Department of Energy. Areva, which is over-extended financially, said that the lack of outside investors caused it to cancel plans to break ground."
Laser enrichment has long raised proliferation concerns. A 1999 US State Department report stated that a laser enrichment facility ''might be easier to build without detection and could be a more efficient producer of high enriched uranium for a nuclear weapons program.''15 The Bulletin of the Atomic Scientists noted in 2014 that laser enrichment "promises to provide a route to uranium enrichment that is less expensive and harder-to-constrain than the centrifuge enrichment pursued by Iran and North Korea."16
References:
1. World Nuclear News, 22 April 2016, 'Cameco scales back uranium production', www.world-nuclear-news.org/UF-Cameco-scales-back-uranium-production-2204...
2. PRNewswire, 25 April 2016, 'UPA Calls on Dept. of Energy to Cease Uranium Transfers Until Market Recovers', www.prnewswire.com/news-releases/upa-calls-on-dept-of-energy-to-cease-ur...
3. Christopher Ecclestone, 22 March 2016, 'Uranium ‒ Waiting for Godot or Forging Ahead?', http://investorintel.com/uranium-energy-intel/uranium-waiting-godot-forg...
4. AAP, 20 April 2016, 'Pro-uranium campaign backfires on Twitter', www.sbs.com.au/news/article/2016/04/20/pro-uranium-campaign-backfires-tw...
5. Frik Els, 20 April 2016, 'Uranium market is getting crushed', www.mining.com/uranium-market-getting-crushed/
6. Prasun Sonwalkar, 22 Apr 2016, 'India not in ‘tearing hurry' on nuclear energy: Piyush Goyal', www.hindustantimes.com/world/india-not-in-tearing-hurry-on-nuclear-energ...
7. Will Boisvert, 22 April 2016, 'Global Nuclear Industry Picked Up Steam in 2015', http://thebreakthrough.org/index.php/issues/nuclear/not-dead-yet
8. Agneta Rising, 21 April 2016, 'Energy Harmony on a Major Scale', www.neimagazine.com/features/featurefinding-harmony-4869601/
See also: www.world-nuclear.org/getmedia/26e364ff-0580-429b-ba72-ee043182ccc6/HARM...
9. Steve Kidd, 21 Jan 2015, 'Is climate change the worst argument for nuclear?', www.neimagazine.com/opinion/opinionis-climate-change-the-worst-argument-...
10. Steve Kidd, 8 Jan 2016, 'After COP-21 - where does nuclear stand?', www.neimagazine.com/opinion/opinionafter-cop-21---where-does-nuclear-sta...
11. WNN, 19 April 2016, 'GE-Hitachi to exit laser enrichment JV', www.world-nuclear-news.org/UF-GE-Hitachi-to-exit-laser-enrichment-JV-190...
12. Keith Williams, 21 April 2016, 'New Evidence Of Challenge For Nuclear Power Industry', http://seekingalpha.com/article/3966906-new-evidence-challenge-nuclear-p...
13. Silex Systems, 24 July 2014, 'GLE Restructures to Align with Adverse Market Conditions', http://asxcomnewspdfs.fairfaxmedia.com.au/2014/07/24/01535857-314409088.pdf
14. Dan Yurman, 24 April 2016, 'Starts, Stops & In-between for New Nuclear Projects in U.S.', https://neutronbytes.com/2016/04/24/starts-stops-in-between-for-new-nucl...
15. Michael Richardson, 6 Aug 2012, 'Uranium on the laser's edge', www.canberratimes.com.au/opinion/uranium-on-the-lasers-edge-20120805-23n...
16. Lawrence M. Krauss et al., 13 Jan 2014, 'Five minutes is too close', http://thebulletin.org/five-minutes-too-close