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Demand Outlook For Uranium Is Uncertain

Kitco News

(Kitco News) - While copper and and battery-related materials can point to a sunny future, the outlook for uranium is wide and uncertain, says the Nuclear Energy Agency in a study released this month.  

The NEA’s mammoth red book, Uranium 2018 Resources, Production and Demand, catalogued in 421-pages a wide mix of factors that could collectively weigh positively or negatively on yellow cake producers.

As of January 2017, the NEA says there are a total of 449 commercial nuclear reactors worldwide producing about 391 gigawatts of electricity (GWe).

If everything goes right for uranium, demand will surge by 45 per cent and nuclear power will produce 568 GWe by 2035. But if the pessimistic scenario unfolds, uranium demand will be cut by 15 per cent to 331 GWe over the next 17 years.

The authors of the study say that high costs and negative public sentiment are pushing against nuclear power.

In the OECD several countries have plans to phase out nuclear power due to public concerns after the Fukushima Daiichi accident. All eight reactors in Germany are to be permanently shut down by 2022. In France, the government passed legislation restricting nuclear power to its current capacity. The country has 58 operational reactors generating 72% of the France’s electricity. The country hopes to reduce the percentage of electrical power provided by nuclear to 50%.

In the Netherlands, which has a single operating reactor, a new nuclear power plant is on the drawing boards, but the cost to build it will be high.

“In 2011, the government issued a list of conditions that must be met to build a new NPP, including that the reactor design and safety levels meet the highest standards (e.g. withstanding an airplane crash) and that the plant owner be responsible for dealing with waste and decommissioning, as well as posting financial guarantees to do so,” writes the study’s authors.

Building has been put on hold “. . . owing to the size of the investment required”.

On the flipside China has 36 operational reactors and 21 under construction. The country wants to fight environmental degradation and health issues resulting from many coal-fired plants.

The authors say that the urgent energy needs in India and China “point to long-term growth” for nuclear power. As of Jan. 1, 2017, 64 reactors were under construction worldwide.

However, cheap natural gas, subsidies for renewables and new safety requirements are reducing “. . . the competitiveness of nuclear power in some liberalised markets.”

And since the authors published this study two years ago, the low case for installed nuclear capacity by 2025 has decreased by 10%.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.