Mikhail Fayno, transport chemist analyst of Brokecreditservice

– The growing demand for uranium will have no negative consequences for Russia

In 2009 uranium production in the world will grow by 11.5% — from 43,600 tons to almost 48,700 tons, Deputy Director General of Atomredmetzoloto OJSC (ARMZ) Alexander Boytsov said during MINEZ-09 conference. This forecast is based on ARMZ’s analysts and projections by the World Nuclear Association. Kazakhstan is showing the most dynamic growth in this field. However, despite its growth, uranium production is still unable to meet the global demand (58,000 tons a year) with the current demand being covered by stored and re-processed uranium. The key risks for the biggest uranium projects are financial, technological and political problems. ARMZ reports that by 2020 the uranium industry will be able to fully meet the needs of the nuclear sector but after 2025 it may run short of resources and face stagnation.

I think that the growing demand for uranium will have no negative consequences for Russia. As many as 49 nuclear reactors are being built for the moment with 36 reactors to be launched shortly. But uranium production is also growing. This is a delayed demand – it will occur in the future when the reactors are built. In the past power companies created own stocks. They bought lots of uranium for future use. In the 1990s uranium price was stable and this might have set the companies at ease. Today, we do not see any outburst of demand, i.e. we do not see anybody storing lots of uranium for the future. Perhaps, the problem is the crisis. The point is that the crisis has curbed the global electricity production while the uranium production is growing – some countries are even producing it in excess. This situation may hold for some time until a jump in the demand. But I am not afraid of that.

We keep hearing experts say that in the future we may run short of uranium as today we are building too many plants and predict that in a couple of months the uranium price will jump to 90 or 100 USD per pound. The last time I heard such forecasts, the price was $70–80. Today, the price is declining, so, the above projections were incorrect: the experts forecasted soaring prices in late 2008 but nothing like that happened. In reality, the price is dropping. In the summer it was $54 and now $42–43. Local over-production is not just a response to the crisis, simply, some countries are actively enlarging their outputs. In Jan-June 2009 Kazakhstan produced 57% more than a year before. Uzbekistan is planning 1.5 time growth by 2012. Russia is also active in this field. So, all the key players are oriented towards growth. The question is if this growing offer will have demand in the coming years. I think that it will if power companies start creating own reserves as they did before. If they don’t do it, the prices will stay low. 

Russia is going to enlarge its uranium production. Particularly, it has large-scale projects at its biggest deposit in Yakutia and at a deposit in Buryatia. We have made a contract with Uranium One and are negotiating with Mongolia. Atomenergoprom is quite active on the market and is storing up for the future. That is in the future we will not be forced to buy uranium at a high price. On the contrary, we will be able to sell it to those who will need it.

Experts say hat by 2030 the global demand for uranium will grow by 59% to 104,000 tons. According to the moderate scenario, the demand will grow to 98,800 tons. WNA says that in 20 years the number of operating nuclear reactors will grow by 88%. The leaders will be China and India. The global nuclear power capacities will grow by 119%. In Russia the capacities will grow by 2.5 times. For the moment, there are 436 nuclear reactors in the world – they generate 15% of total energy. The leaders are the United States, France, Japan and Russia. 50 reactors are under construction for the moment: 16 in China, 9 in Russia, 6 in India and 5 in South Korea.