Gavin du Venage reported in 2015 that uranium producers have fared badly in the past five years, which could leave utilities struggling to find adequate fuel supplies until new mines are built. The double punch of the 2008 economic crisis and the Fukushima tsunami disaster in Japan in 2011 has meant uranium has a particularly steep hill to climb. With countries including the UAE, Jordan, China and India among those committed to nuclear power, the price of uranium has begun a fragile recovery, although few investors in the sector are ready to back new production. This could mean that as reactors come online, utilities may find themselves competing for supply until mining output catches up. For a time, uranium production was a good place to be.
At its peak in 2007, the mineral was trading above U.S. 130 dollars per pound of uranium oxide as giddy investors piled in, in anticipation of predicted new builds around the world, but a savage correction brought it down to a more realistic 70 dollars, a still profitable level for producers. Then came Fukushima tsunami. The flooding of the Daiichi reactor plant following an earthquake and tsunami stopped the emerging nuclear renaissance in its tracks, sending the price of uranium to the floor.
For much of last year it traded under 30 dollars a pound, at which level most mining houses were losing cash. Late last year came a fillip - a southern prefecture in Japan approved the restarting of two reactors that had been idle since the Fukushima tsunami. The spot price reacted quickly, leaping from below 30 dollars to where it is now at 39 dollars, and the long-term price indicator - the critical one for new projects - a little higher at 49 dollars per pound of U3O8. Australian Paladin Energy, which put its Kayelekera operation in Malawi into care and maintenance in 2014, rallied 12 per cent on the news. Other uranium plays on Australian ASX, Toronto TSX and Britain AIM stock exchanges enjoyed their best trading day in years.
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