Uranium the Slumbering Giant Awakes: Competition for Africa's Uranium Resources Is Hotting Up as the Number of Reactors Worldwide Grows Steeply. China Is Seeking to Secure Supplies for Its Burgeoning Nuclear Sector and France's Military Intervention into Mali Highlights Uranium's Increasing Strategic Significance. Report by MJ Morgan
About 2.0% of the world's production and known reserves of uranium are already found on the continent and this share is set to get bigger--five of the to biggest new uranium projects coming online are African.
After the catastrophe of Fukushima in Japan, the nuclear industry understandably faced a severe examination from governments all over the world. Japan said it would scale back nuclear generation, as did Germany. Uranium prices fell and have continued to fall; they are down 14% on last year.
However, with the terrifying horror of the crisis fading from memory, at least for those it did not directly affect, the sector is set for renewal. Most of the nuclear plants in development before the crisis were not cancelled.
Now Japan, which faces dependence on imported oil, gas or heavily polluting coal as the alternative to nuclear power, has a new government and the plan to close the country's 50 reactors looks almost certain to be dropped. It is even thought more likely that the sector will expand. Only Germany appears to be sticking to its post-Fukushima proposal to close its nine reactors by 2022.
But this decrease is dwarfed by the number of new reactors that are planned. There are 450 nuclear reactors in the world functioning today, 65 more are already currently in construction and 95 in total are due to be commissioned by 2021.
China currently has 16 nuclear power stations and more than 30 under construction as it looks to increase its energy mix from 2% nuclear at present to 14% when the current expansion programme is finished. This is expected to put upward pressure on uranium prices, which are likely to at least recover the ground lost last year and may rise even higher.
Adding further momentum to prices is the fine calibration between supply and demand that currently exists. Technically, the market is in supply deficit. According to the World Nuclear Association, uranium mines only meet 85% of the demand for power generation (although a certain amount of recycled nuclear fuel can be used).
Further, a 20-year deal by which Russia has supplied uranium from decommissioned warheads expires this year and if, as seems likely, it is not renewed then some 12.5% of uranium supplies will disappear from the market.
Global production is significantly lower than it was a decade ago and with all the new reactors scheduled to open, demand is set to grow much faster than supply. However, much of the world's uranium is being mined at a cost that is substantially in excess of the market price.
France secures supply
Niger alone currently supplies 7.5% of the world's uranium, predominately to France. Given that 75% of France's electricity is produced using nuclear power, securing its uranium supplies is essential to the country. French mining giant Areva (which produces 16% of global uranium output) is the largest investor in Niger, where it has two mines, at Arlit and Akouta. The company also mines in Kazakhstan and Canada and its combined production of 8,709 tonnes (in 2011) is roughly equally drawn from the three countries.
However, its [euro]1.2.bn Imouraren project in Niger has the potential to produce 5,000 tonnes a year. Areva recently paid [euro]35m to the government to compensate for delays in commissioning Imouraren. There have been difficulties for the company before. Five French nationals were kidnapped from the Arlit mine in 2010 and four are still being held.
France is going to find it tougher to secure supplies, at least on such favourable terms as in the past, henceforth. Niger's President Ma-hamadou Issoufou said in February that his country would be seeking a new agreement with Areva as well as looking at the possibility of new partnerships with other nations.
Areva have mined in Niger for more than 40 years (for much of this time they had a monopoly) and currently contribute around cloom a year to Niger's treasury--an amount that President thinks is far from adequate. …