Post by digby on Sept 27, 2005 15:30:11 GMT -6
The actual article has many graphs.
www.uic.com.au/nip36.htm
-----------------------------------------------------------
Uranium Markets
Nuclear Issues Briefing Paper 36
October 2004
• Production from world uranium mines now supplies only 55% of the requirements of power utilities.
• Mine production is increasingly supplemented by ex-military material.
• World mine production will need to expand significantly post 2005.
All mineral commodity markets tend to be cyclical, ie, prices rise and fall substantially over the years, but with these fluctuations superimposed on long-term decline in real prices. In the uranium market, very high prices in the late 1970s gave way to very low prices in the early 1990s, the spot prices being below the cost of production for most mines. In 1996 spot prices recovered to the point where most mines could produce profitably, though they then declined again and only recovered late in 2003.
"Spot prices" apply to marginal trading from day to day and in 2003 represented less than 12% of total sales. Most trade is 3-7 year term contracts with producers selling direct to utilities, but with the price often related to the spot price.
The reasons for fluctuation in mineral prices relate to demand, and perceptions of scarcity. The price cannot indefinitely stay below the cost of production, nor will it remain at very high levels for longer than it takes for new producers to enter the market.
DEMAND
About 440 reactors with combined capacity of some 360 GWe, require 77,000 tonnes of uranium oxide concentrate containing 66,000 tonnes of uranium from mines (or the equivalent from stockpiles or secondary sources) each year. The capacity is growing slowly, and at the same time the reactors are being run more productively, with higher capacity factors, and reactor power levels. However, these factors increasing fuel demand are offset by a trend for increased efficiencies, so demand is dampened - over the 20 years from 1970 there was a 25% reduction in uranium demand per kWh output in Europe due to such improvements, which continue.
Fuel burnup is measured in MW days per tonne U, and many utilities are increasing the initial enrichment of their fuel (eg from 3.3 to more than 4.0% U-235) and then burning it longer or harder to leave only 0.5% U-235 in it.
source: Uranium Institute 1992
The graph from Sweden's Oskarsamn-3 reactor shows that with increasing fuel burn-up from 35,000 to 55,000 MWd/t a constant amount of uranium is required per unit of electrical output, and energy used (indicated by SWU) for increased levels of enrichment increases slightly. However, the amount of fabricated fuel used in the reactor drops significantly due to its higher enrichment and burn-up.
In the USA, Exelon has also pursued higher enrichment and burnup, but in addition has reduced the tails assay from enrichment so that significantly less natural uranium feed is required. However, more energy input to enrichment is then needed.
Because of the cost structure of nuclear power generation, with high capital and low fuel costs, the demand for uranium fuel is much more predictable than with probably any other mineral commodity. Once reactors are built, it is very cost-effective to keep them running at high capacity and for utilities to make any adjustments to load trends by cutting back on fossil fuel use. Demand forecasts for uranium thus depend largely on installed and operable capacity, regardless of economic fluctuations. For instance, when South Korea's overall energy use decreased in 1997, nuclear energy output actually rose, to replace imported fossil fuels.
Looking ten years ahead, the market is expected to grow slightly. Demand thereafter will depend on new plant being built and the rate at which older plant is retired. Licensing of plant lifetime extensions and the economic attractiveness of continued operation of older reactors are critical factors in the medium-term uranium market. However, with electricity demand by 2030 expected (by the OECD's International Energy Agency) to double from that of 2004, there is plenty of scope for growth in nuclear capacity in a greenhouse-conscious world.
SUPPLY
Mines in 2003 supplied some 42,300 tonnes of uranium oxide concentrate (U3O8) containing almost 36,000 tU, far less than utilities' annual requirements. The balance is made up from secondary sources or stockpiled uranium held by utilities, but those stockpiles are now largely depleted.
The perception of imminent scarcity drove the "spot price" for uncontracted sales to US$ 16.40 per pound U3O8 in mid 1996. Due to expectation of increased secondary supplies, the spot price then declined to around US$ 7/lb but has since stabilised at almost US$ 10/lb before rising to over $20. Most uranium however is supplied under long term contracts and the prices in new contracts reflect a premium above the spot market.
Note that at current prices only a quarter of the cost of the fuel loaded into a nuclear reactor is the actual ex-mine (or other) supply. The balance is mostly the cost of enrichment and fuel fabrication.
The above graph, from International Nuclear Inc., shows a cost curve for world uranium producers, and suggests that for 45,000 t/yr U3O8 production from mines, (just above present level), US$15/lb is a plausible price.
SUPPLY from elsewhere
As well as existing and likely new mines, nuclear fuel supply may be from secondary sources including:
• recycled uranium and plutonium from spent fuel, as mixed oxide fuel,
• re-enriched depleted uranium tails,
• ex military weapons-grade uranium,
• civil stockpiles,
• ex military weapons-grade plutonium.
Major commercial reprocessing plants are operating in France and UK, with capacity of over 4000 tonnes of spent fuel per year. The product from these re-enters the fuel cycle and is fabricated into fresh mixed oxide (MOX) fuel elements. About 200 tonnes of MOX is used each year, equivalent to less than 2000 tonnes of U3O8 from mines.
Military uranium for weapons is enriched to much higher levels than that for the civil fuel cycle. Weapons-grade is about 97% U-235, and this can be diluted about 25:1 with depleted uranium (or 30:1 with enriched depleted uranium) to reduce it to about 4%, suitable for use in a reactor. From 1999 the dilution of 30 tonnes such material is displacing about 10,600 tonnes per year of mine production. (see also paper on Military Warheads as a source of Nuclear Fuel)
As a result of the 1994 "Megatons to Megawatts" agreement between USA and Russia, Russia owns a considerable amount of natural uranium which corresponds with the diluted high-enriched uranium it has supplied as described above since January 1997. In 1999 an agreement was signed which restrains this material from entering the market in the short term. Some other supply from Russian and other CIS stockpiles is possible in the short term.
The USA and Russia have agreed to dispose of 34 tones each of military plutonium by 2014. Most of it is likely to be used as feed for MOX plants, to make about 1500 tonnes of MOX fuel which will progressively be burned in civil reactors.
The following graph suggests how these various sources of supply might look in the decade ahead:
World uranium production from mines in 2003 was almost 36,000 tonnes uranium, with Canada as the leading producer at 10,458 tU, and Australia next at 7596 tU. See also paper on World Uranium Mining.
The following graph gives an historical perspective, showing how early production went first into military inventories and then, in the early 1980s, into civil stockpiles. It is this early production which is now being released to the market.
Source: WNA 2002
----------------------------------------------
I also checked historical pricing for uranium. From 1989 thru 2003, it was relatively stable at $10/ton. At that point, it started it’s dramatic rise to $20/ton in January 2005. The current price is $30/ton.
www.uic.com.au/nip36.htm
-----------------------------------------------------------
Uranium Markets
Nuclear Issues Briefing Paper 36
October 2004
• Production from world uranium mines now supplies only 55% of the requirements of power utilities.
• Mine production is increasingly supplemented by ex-military material.
• World mine production will need to expand significantly post 2005.
All mineral commodity markets tend to be cyclical, ie, prices rise and fall substantially over the years, but with these fluctuations superimposed on long-term decline in real prices. In the uranium market, very high prices in the late 1970s gave way to very low prices in the early 1990s, the spot prices being below the cost of production for most mines. In 1996 spot prices recovered to the point where most mines could produce profitably, though they then declined again and only recovered late in 2003.
"Spot prices" apply to marginal trading from day to day and in 2003 represented less than 12% of total sales. Most trade is 3-7 year term contracts with producers selling direct to utilities, but with the price often related to the spot price.
The reasons for fluctuation in mineral prices relate to demand, and perceptions of scarcity. The price cannot indefinitely stay below the cost of production, nor will it remain at very high levels for longer than it takes for new producers to enter the market.
DEMAND
About 440 reactors with combined capacity of some 360 GWe, require 77,000 tonnes of uranium oxide concentrate containing 66,000 tonnes of uranium from mines (or the equivalent from stockpiles or secondary sources) each year. The capacity is growing slowly, and at the same time the reactors are being run more productively, with higher capacity factors, and reactor power levels. However, these factors increasing fuel demand are offset by a trend for increased efficiencies, so demand is dampened - over the 20 years from 1970 there was a 25% reduction in uranium demand per kWh output in Europe due to such improvements, which continue.
Fuel burnup is measured in MW days per tonne U, and many utilities are increasing the initial enrichment of their fuel (eg from 3.3 to more than 4.0% U-235) and then burning it longer or harder to leave only 0.5% U-235 in it.
source: Uranium Institute 1992
The graph from Sweden's Oskarsamn-3 reactor shows that with increasing fuel burn-up from 35,000 to 55,000 MWd/t a constant amount of uranium is required per unit of electrical output, and energy used (indicated by SWU) for increased levels of enrichment increases slightly. However, the amount of fabricated fuel used in the reactor drops significantly due to its higher enrichment and burn-up.
In the USA, Exelon has also pursued higher enrichment and burnup, but in addition has reduced the tails assay from enrichment so that significantly less natural uranium feed is required. However, more energy input to enrichment is then needed.
Because of the cost structure of nuclear power generation, with high capital and low fuel costs, the demand for uranium fuel is much more predictable than with probably any other mineral commodity. Once reactors are built, it is very cost-effective to keep them running at high capacity and for utilities to make any adjustments to load trends by cutting back on fossil fuel use. Demand forecasts for uranium thus depend largely on installed and operable capacity, regardless of economic fluctuations. For instance, when South Korea's overall energy use decreased in 1997, nuclear energy output actually rose, to replace imported fossil fuels.
Looking ten years ahead, the market is expected to grow slightly. Demand thereafter will depend on new plant being built and the rate at which older plant is retired. Licensing of plant lifetime extensions and the economic attractiveness of continued operation of older reactors are critical factors in the medium-term uranium market. However, with electricity demand by 2030 expected (by the OECD's International Energy Agency) to double from that of 2004, there is plenty of scope for growth in nuclear capacity in a greenhouse-conscious world.
SUPPLY
Mines in 2003 supplied some 42,300 tonnes of uranium oxide concentrate (U3O8) containing almost 36,000 tU, far less than utilities' annual requirements. The balance is made up from secondary sources or stockpiled uranium held by utilities, but those stockpiles are now largely depleted.
The perception of imminent scarcity drove the "spot price" for uncontracted sales to US$ 16.40 per pound U3O8 in mid 1996. Due to expectation of increased secondary supplies, the spot price then declined to around US$ 7/lb but has since stabilised at almost US$ 10/lb before rising to over $20. Most uranium however is supplied under long term contracts and the prices in new contracts reflect a premium above the spot market.
Note that at current prices only a quarter of the cost of the fuel loaded into a nuclear reactor is the actual ex-mine (or other) supply. The balance is mostly the cost of enrichment and fuel fabrication.
The above graph, from International Nuclear Inc., shows a cost curve for world uranium producers, and suggests that for 45,000 t/yr U3O8 production from mines, (just above present level), US$15/lb is a plausible price.
SUPPLY from elsewhere
As well as existing and likely new mines, nuclear fuel supply may be from secondary sources including:
• recycled uranium and plutonium from spent fuel, as mixed oxide fuel,
• re-enriched depleted uranium tails,
• ex military weapons-grade uranium,
• civil stockpiles,
• ex military weapons-grade plutonium.
Major commercial reprocessing plants are operating in France and UK, with capacity of over 4000 tonnes of spent fuel per year. The product from these re-enters the fuel cycle and is fabricated into fresh mixed oxide (MOX) fuel elements. About 200 tonnes of MOX is used each year, equivalent to less than 2000 tonnes of U3O8 from mines.
Military uranium for weapons is enriched to much higher levels than that for the civil fuel cycle. Weapons-grade is about 97% U-235, and this can be diluted about 25:1 with depleted uranium (or 30:1 with enriched depleted uranium) to reduce it to about 4%, suitable for use in a reactor. From 1999 the dilution of 30 tonnes such material is displacing about 10,600 tonnes per year of mine production. (see also paper on Military Warheads as a source of Nuclear Fuel)
As a result of the 1994 "Megatons to Megawatts" agreement between USA and Russia, Russia owns a considerable amount of natural uranium which corresponds with the diluted high-enriched uranium it has supplied as described above since January 1997. In 1999 an agreement was signed which restrains this material from entering the market in the short term. Some other supply from Russian and other CIS stockpiles is possible in the short term.
The USA and Russia have agreed to dispose of 34 tones each of military plutonium by 2014. Most of it is likely to be used as feed for MOX plants, to make about 1500 tonnes of MOX fuel which will progressively be burned in civil reactors.
The following graph suggests how these various sources of supply might look in the decade ahead:
World uranium production from mines in 2003 was almost 36,000 tonnes uranium, with Canada as the leading producer at 10,458 tU, and Australia next at 7596 tU. See also paper on World Uranium Mining.
The following graph gives an historical perspective, showing how early production went first into military inventories and then, in the early 1980s, into civil stockpiles. It is this early production which is now being released to the market.
Source: WNA 2002
----------------------------------------------
I also checked historical pricing for uranium. From 1989 thru 2003, it was relatively stable at $10/ton. At that point, it started it’s dramatic rise to $20/ton in January 2005. The current price is $30/ton.
