An Australian company vying to develop a new uranium mine in Namibia has told a mining conference that a “perfect storm” is tipped to shake up the global uranium sector.
Speaking at the 2014 Africa Down Under Conference, Deep Yellow Limited’s managing director, Greg Cochrane, said nuclear energy growth was underestimated.
He said uranium demand out of China, India, Russia and the Middle East would create a 70 million pound supply gap by 2020.
“When one looks at uranium supply, new project development has mostly stalled, the HEU secondary supply stream is finished, there has been a widespread curtailment of production and at least 12 to 15 new uranium mines are needed globally by 2020,” Cochrane explained.
“The sector’s strategic response for the development of new mines will only commence when the trigger price moves beyond US$80 a pound, probably between 2016 and 2020.”
The comments came as Prime Minister Tony Abbott signed a uranium export deal with India which will see Australian uranium power nuclear reactors in the country.
It is hoped the deal will help alleviate the sluggish uranium market which has failed to pick back up after the Fukushima meltdown.
In a clear sign of the affect the historically low uranium price is having, one Australian company decided to ditch its hopes of developing a mine and instead focus on property development.
United Uranium holds several exploration licences in Western Australia including the Mt Danvers and Bremer Basin projects.
However an extended lag in the price of uranium forced the junior to reconsider and it undertook a strategic review which will see it move into the property market.
After falling below $US29 per pound in May, the spot price for uranium has since recovered to reach $US33 per pound last week.
UBS expects this trend to continue, predicting the price will average $US43 per pound in 2015, and higher again to $US53 in 2016.
UBS commodities analyst Daniel Morgan said all eyes were on Japan’s nuclear restart program for signs of life.
"What would be great for the price would be if Japan came back and said we are going to ramp up the fleet. That has been talked about for a while but for the most part the fleet is still offline," Morgan said.