Greg Klein reports that to those who watch uranium, its underachieving price has not just been an ongoing disappointment. It is a source of frustration to those who have made bullish forecasts. Lackey has been less surprised than others, however.
He spoke at a conference last year and might have been the only one who thought uranium was actually going to go down this year, he recalls. It did go down, but way more than he thought, which was about $29 or $28. He thought everybody else was too optimistic about Japan restarting all the units and we have seen excess supply coming out of places like Kazakhstan. So the weakness this year did not surprise Lackey.
History gives him a sense of perspective, not to mention optimism. He has seen this from $8 in the late 90s to $136 in 2007. It fell during the 2008 recession, then came back nicely to $72 in 2011, the day Fukushima was hit. So we have had some big moves both ways over the years but now we are down to a price that is not sustainable. How many new mines would you get at these prices? He can not think of too many unless you find something huge in the Basin, because high-volume, low-grade projects in many other places have people looking for $50 to $60, not $21.
He sees a number of price catalysts over the next few years ... increased buying from utilities, a possible reduction in Kazakhstan supply, Japanese restarts and nuclear expansion elsewhere.
Kazakhstan provided 39% of world supply last year (compared with Canada 22%). But Lackey wonders whether low prices will force the global leader to cut output. Kazakhstan has been disregarding a 2011 self-imposed production cap of 20,000 tonnes per year, the World Nuclear Association states. WNA data attributes last year output to 23,800 tonnes. As for Japan, it will have to do something ultimately, Lackey maintains. There are 51 of the 54 reactors idled, that is six or seven billion dollars a plant.
Resource Portal for I2M Clients, Associates, and Geoscientists
Managed & Built by I2M Consulting, LLC | © 2010-
Managed & Built by I2M Consulting, LLC | © 2010-