Rio Tinto’s energy chief warned punters should not get too carried away with a spike in the uranium price, predicting an uptake in the industry was years away.
Speaking at a business lunch in Sydney on Tuesday, Harry Kenyon-Slaney said the “modest” lift in the spot price was not something the company was getting excited by just yet.
After falling below $US29 per pound in May, the spot price for uranium has since recovered to reach $US33 per pound last week.
However this is still well below the sale price before the Fukushima tragedy, and Kenyon-Slaney said while Rio saw a bright future for the uranium industry, it may take years before a real rebound is seen.
“The uranium market has been very weak for a long period of time,” he said.
“Over the long-term we will need all supplies of electricity and the need for nuclear power and the growth in nuclear power, particularly in china is self-evident.
“But at the moment the industry is going through some very tough times and at some point new production will have to be incentivised in order to deliver into the power programs, particularly in china but also in many other countries around the world.
“This is going to take time.”
Rio is one of the world’s largest uranium producers with operations in Australia, Canada and Namibia.
Mining at its Northern Territory open cut Ranger mine was completed in 2012, with the company now targeting underground exploration of the Ranger 3 Deeps mineral resource.
The Ranger 3 deposit represents the miner’s long-term future, with predictions it holds more than 34,000 tonnes of high grade ore, however mining the area is subject to approval from the government and traditional owners in the region.
The company spent $46 million exploring the Ranger 3 Deeps decline in 2013, with 40 holes completed in the December quarter totalling 8,383 metres.
Kenyon-Slaney would not be drawn on a question about disappointing drilling results at the site, saying Ranger was a ‘business in transition”.
The Rio executive said nuclear would play a growing in the way the world's energy was produced.
He said Chine had embarked on a ‘quiet revolution’ with the construction of a reactor that would see the country’s nuclear energy market boom.
“For the first time in history, the overall cost of nuclear generation is now lower than that from coal or gas in coastal China,” Kenyon-Slaney said.
“China is proceeding with care, but expected to overtake the USA – which has just over 100 GW – to have the world’s largest nuclear generating capacity during the 2020s.
“Chinese officials have talked of building 400 GW of new nuclear capacity by 2050. That is more than exists in the whole world today
“It would take this mooted new Chinese capacity just in nuclear less than a month to generate Australia’s current electricity needs for a whole year.”
Holding around 30 per cent of the world’s known uranium reserves, Kenyon-Slaney said Australia is well-placed to meet this future nuclear energy demand when programs around the world started being rolled out over the next few years.