The Red Book - the facts about uranium supply and demand27 August 1998
The latest issue of the Red Book1, the leading single reference on the state of the world uranium industry, is now out. Produced every two years by the OECD Nuclear Energy Agency and the IAEA, this is a source book of official country-by-country data on exploration activities, uranium production, projected production capabilities, inventories, other supply sources, uranium demand and demand projections, as well as details on supply/demand relations, as of 1 January 1997.
Since the last Red Book, published two years ago, the price of uranium has gone through two distinct phases. The unrestricted price rose 116% between October 1994 and August 1996, to a peak of $39.65/KgU. Since then it has fallen back to $23.92/KgU as of 31 August 1997.
The price rise followed almost 15 years of falling prices and contracting activities and was taken by some to indicate a significant recovery. But despite the fact that uranium mining production now only supplies 65% of global demand, the privatisation of the US Enrichment Corporation and the release onto the market of significant quantities of downblended highly enriched uranium (HEU) from the Former Soviet Union’s military means that the price is likely to remain low for the foreseeable future.
This emphasises that, while the world uranium industry has shown signs of change and renewal in the last few years, events and various market indicators reveal the persistent uncertainty faced by all uranium producers and consumers.
The effect of inventories is particularly crucial to assessing the future market. The uncertainty related to the remaining levels of stockpiles and the amount of surplus defence material, in both Russia and the US, that will be entering the market make it difficult to determine when a closer balance between uranium supply and demand will be reached.
The number of countries covered by the latest Red Book has increased significantly over the previous issues, with national reports on 58 countries. New information is provided for uranium producing countries including plans for production expansion in Australia, Canada, Kazakhstan, Mongolia, Russia, USA and Uzbekistan.
For the second time a chapter on radiation safety and environmental aspects is included. Environmental issues are increasingly important within the industry due in particular to two aspects. Firstly, the increasing number of production facilities that have recently been taken out of operation and secondly, the increasing requirements for environmental approval for new projects.
Future uranium demand
In addressing future uranium demand, the Red Book considers likely growth rates for nuclear power stations globally and anticipates the impacts of the decommissioning of plants. A key question in determining the long term uranium demand is the extent to which heightened concern about the environmental impacts of fossil fuel burning translates into greater public acceptance of nuclear power. Other factors more within the industry’s control include the rate of orders for new nuclear capacity, the rate of retirement of the existing world nuclear generating stock, the deployment of advanced reactor technologies and of advanced reprocessing and enrichment technologies.
As of 1 January 1997, known resources (RAR and EAR-I)2 recoverable at costs of $130/kgU amount to about 4.3 million tU. Compared to 1995 , the total rose by about 12%. The increase is partly due to the inclusion of resources previously in the “other known resources” category (eg Russia, Uzbekistan and India).
n Uranium exploration
After more than 10 years of decreasing activities, there was an increase of exploration expenditures in 18 of the 26 reporting countries. Another 24 countries reported that no uranium exploration took place in 1995 and 1996.
n Uranium production
World uranium production increased 5% to about 33 200 tU in 1995 and about 9% to 36 200 tU in 1996. After falling over 36% from 1990, uranium production reached a low of 31 611 tU in 1994. The changes in the level of production are evenly distributed geographically in the East and West.The 1996 production provided less than 65% of the world reactor requirements (60 488 tU). In OECD countries the 1996 production (21 183 tU) satisfied only 42% of the demand. The remaining material to fuel reactors came primarily from stockpiles. Small amounts came from the sale of LEU and from HEU. An additional 1700 tU (natural equivalent) was from MOX fuel (1200 tU) and reprocessed uranium (500 tU).
In 1996, 23 countries produced uranium including Germany which recovered uranium in association with its closure programme in the east of the country. The 10 major producers (Australia, Canada, Kazakhstan, Namibia, Niger, Russia, South Africa, Ukraine, USA and Uzbekistan) contributed about 90% of the output. Total production from China, India and Pakistan is estimated to account for about 2-3% of the output.
The history of uranium supply and demand has been dominated by an imbalance between production and consumption. For many years production exceeded reactor requirements and other uses, resulting in the accumulation of large stockpiles in the world.
Since 1990 world uranium production has been below uranium requirements which has substantially reduced inventories. The difference between production and reactor requirements increased from 11 000 tU in 1991 to about 28 000 tU in 1995. It was about 24 300 tU in 1996. By 1 January 1997 the cumulative difference over the period was about 136 000 tU. Much of this shortfall has been met by the world-wide drawdown of inventory. A small portion was being met from reprocessing of discharged fuel and the sale of LEU blended from Russian HEU.
|Disposal of government surpluses|
|In 1996 plans and schedules for disposing of Russian Government surplus HEU and US government surplus HEU, natural uranium and LEU were announced. Under current schedules, around 180 800 tU (470 million pounds U3O8) and 100 million SWU of enrichment are expected to be displaced by the commercialisation of US and Russian government surplus inventories over the next 15 to 20 years. Over 11 5000 tU (30 million lb U3O8) and 6 million SWU from these sources could enter the market annually within the next 5 years. The blending down of 500 t of Russian surplus HEU will contribute the largest share; it is equivalent to about 153 000 tU (398 million lb U3O8) and 92 million SWU. The USEC Privatisation Act established a quota for the sale to the US end users of uranium derived from Russian HEU: from 769 tU (2 million lb U3O8) in 1998, to 5000 tU (13 million pounds U3O8) in 2004, reaching 7692 tU (20 million lb U3O8) by 2009. The HEU-derived material represents 4% of US reactor requirements in 1998, increasing to 33% by 2004, and reaching more than 50% in 2009. This is equivalent to between 1 and 11% of the annual world requirements over the period.|