Thomas Drolet Warns of a Coming Grand Canyon of Uranium Supply Deficit

Uranium (Nuclear Minerals) / Exploration, Mining, Marketing, & Acquisitions

Date posted: 09/15/15

In an interview with The Energy Report, Thomas Drolet, head of Drolet & Associates Energy Services, illuminated junior companies in the Athabasca Basin, southern Alberta and South America that could be strategic sources for countries shoring up domestic supply and for majors that need replacement uranium resources. A supply deficit is opening up in the uranium markets, with 66 nuclear reactors under construction globally and more restarting in Japan. As Russia and China shore up their supply chains in Kazakhstan and elsewhere, the rest of the world could be scrambling for new sources to keep the lights on. Drolet reports that the utilities, and Japanese utilities are no different than North American, European or Canadian utilities, prefer to buy in the long-term markets. They usually buy somewhere between two and five years forward supply. That has left the nine Japanese utilities that have nuclear reactors on their systems stockpiling inventory to fulfill long-term contracts. A few of those utilities paid a penalty to get out of the contracts. But the majority stuck with them, so they do have a lot of inventory on hand. An average utility that restarts four reactors would burn through excess uranium inventory in about five to seven years. Some reactors will start sooner than the average of the 25, and work through supplies faster, but some will take longer. In the meantime, how much of an impact can Chinese and Indian nuclear construction have on demand in the uranium market? Drolet reports that several hundred reactors are being planned or under construction in China, India, Russia, Saudi Arabia, Argentina and the UAE. That does not include the smaller reactor business in places like Turkey, Jordan, Bulgaria, Bangladesh and Vietnam. That means a deficit in supply from known sources, approximately 30 to 35 million pounds per year (aka 30 to 35 Mlbs per year) in what is currently a 155 + Mlbs per year market, will likely open up by 2020-2022.