Uranium Overview
Unlike most metals that are mined for multiple uses and markets, uranium's main use is as a nuclear fuel in power generation. Approximately 17% of the world's electricity is generated from nuclear reactors, and demand for nuclear energy is set to increase given the declining oil supplies and pressure to find cheaper and cleaner forms of energy.
Three countries, namely Australia (30%) Kazakhstan (17%) and Canada (12%) account for over half of the world's uranium supply - estimated to be circa 3,500,000 tonnes U. However, with the world electricity demand predicted to double by 2030, demand for uranium and nuclear power is set to increase. Nuclear power offers energy security without compromising climate change or economic performance. The challenge for the uranium industry now is to satisfy this demand by undertaking more exploration, increasing production, improving operational efficiency and technical performance and to ensure the market adequately reflects the costs of providing nuclear fuel on a sustainable and secure basis.
Geology
While uranium is one of the most abundant elements in the Earth's crust, concentrated uranium ores are found in only a few places, usually in hard rock, such as granites or consolidated sediments, such as sandstone.
Uranium is commonly found as the mineral uraninite or pitchblende, a form of uraninite mixed with other minerals. It is usually black to steel black with a dull lustre. The most stable form is Triuranium octoxide (U3O8), better known as yellowcake, which is the concentrate most commonly derived from uranium mining operations.
Mining
Removing uranium ore from the ground can be undertaken in one of three ways, depending on how it is deposited. Open pit mining is used to extract uranium deposits close to the surface.
Underground mining methods are used for deep deposits. The known 'in situ leaching' (ISL) process injects chemicals to dissolve the uranium underground into a uranium-bearing solution that can be pumped to the surface for processing.
Demand
The scale of the world's nuclear industry is considerable and growing. Many industrialised nations now rely on nuclear power generation as a major source of their energy supply, namely the United States, Germany, Japan, Hungary, Sweden, and France. Worldwide, there are 441 nuclear power reactors operating in 31 countries (with a further 139 reactors either in production or pipeline) with a total installed capacity of 368,000 MWe. In addition many emerging economies are realising the potential of investing in alternative energy's. China has opened six reactors since 2002. Two more are under construction and China's aim is to increase its nuclear capacity fivefold by 2020, potentially equivalent to building up to 40 reactors in the next 15 years.
Present demand for uranium is outstripping supply. There has been little exploration for 25 years and no new mines built outside Canada for the last 20 years. There is not enough uranium capacity to satisfy existing plants - crucially, new uranium deposits need to be put into production now that global electricity demand is growing rapidly. Even with effective energy efficiency programmes in developed countries, the International Energy Agency expects global electricity consumption to double by 2030.
Part of the rise in interest in nuclear is that in an environmentally conscious age, nuclear plants are once again seen as clean energy. They emit a tiny fraction of the carbon dioxide produced by burning fossil fuels such as oil, coal or gas and are crucial if countries are to meet the carbon dioxide emissions targets set out in the Kyoto protocol.
Production from world uranium mines are now estimated to supply only 55% of the requirements of power companies, the shortfall is supplemented by ex-military grade uranium but this supply is finite, is declining or being held back.
Consequently world mine production needs to expand significantly. In 2003 it was estimated that some 440 reactors worldwide required 77,000 tonnes of uranium oxide concentrate containing 66,000 tonnes of uranium each year. By contrast mines in 2003 supplied some 42,300 tonnes of uranium oxide concentrate (U3O8) containing almost 36,000 tU - considerably far less than the power utilities' annual requirements.
The balance was made up from secondary sources or stockpiled uranium held by power companies, but these stockpiles are now largely depleted. This supply shortfall has had an impact on the uranium market. By the end of the 1990s when the market was in decline, uranium prices had fallen to under $8 per pound. By Autumn 2005 they had quadrupled to $33 per pound. Market observers believe that there is a reasonable scenario to be made for uranium prices to achieve a long-term average of $55 per pound.