1 Supply – Demand Projection to 2035 Uranium 2009: Resources, Production and Demand Robert Vance OECD Nuclear Energy Agency.

1

Supply – Demand Projection to 2035Uranium 2009: Resources, Production

and Demand

Robert VanceOECD Nuclear Energy Agency

2

Uranium Group History• Formed in the mid 1960s - OECD, European Nuclear

Energy Agency• 1991: former Eastern Block countries join• 1996: International Atomic Energy Agency member

states formally join; reorganized as the Joint NEA-IAEA Uranium Group

• Principal product - Uranium Resources, Production and Demand (commonly known as the Red Book), published every 2 years

3

Uranium Market Primer• Overproduction in early decades of industry– Important source of market supply - How much is left?

• Utilities want long-term (60 year) estimates of resources and production; producers encourage concept of scarcity

• Transition from government or government controlled activity to publicly traded companies – Ongoing, but far from complete

• Often cited, well known Spot Market– Price transparency, but <25% (generally <15%) of market

• Long Term market under confidential terms– Price “indicators” only; terms and conditions confidential

4

Over Production (575 000 tU left??)

“Substantial’ progress toward a clean, clever and competitive energy future– Energy intensity and primary energy demand decline– GHG emissions decline– Renewables growth (albeit from very low base)– Measures to promote energy efficiency implemented– Energy R&D funding increased considerably– Energy security measures reinforced– Market reforms advancing

5

Uranium Spot and Long-Term Price

6

Uranium Price Indicators

7

Red Book Resource Classification SchemeRe

cove

rabl

e at

Cos

ts

Reasonably Assured Resources

Reasonably Assured Resources

Reasonably Assured Resources

Reasonably Assured Resources

USD<40/ kgU

USD 40-80/kgU

USD 80-130/kgU

USD 130-260/kgU

InferredResources

InferredResources

InferredResources

InferredResources

PrognosticatedResources

PrognosticatedResources

PrognosticatedResources

PrognosticatedResources

Spec

ulati

ve R

esou

rces

Identified Resources Undiscovered Resources

Dec

reas

ing

econ

omic

att

racti

vene

ss

Decreasing confidence in estimates

8

Uranium Resource Inventory (01/01/2009)• Identified Resources (RAR + IR)

– 5 404 000 tU (USD <130/kgU, or 50/lbU3O8); -1.2% from 2007

– 6 306 000 tU (USD<260/kgU, or 100/lbU3O8); +15.5% from 2007

• Undiscovered Resources (Prog. & Spec.)– 10 400 000 tU; -1% from 2007 (not reported by all; e.g. Australia, Namibia…)

• Although overall total including high-cost has increased, low cost (USD<40/kgU) has decreased considerably due to increased mining costs– RAR: 68% decline from 2007 to 569 900 tU– IR: 81% decline from 2007 to 226 600 tU

Not all mineable U on planet earth, just what is known as of reference date

9

• Direct costs of mining, transporting and processing ore• Costs of associated environmental and waste management during and after

mining• Costs of maintaining non-operational production units• For ongoing projects, non-amortized capital costs• Capital cost of providing new production units, including the cost of financing• Indirect costs (e.g. office overheads, taxes and royalties)• Future exploration and development costs to the stage where it is ready to be

mined• Sunk costs not normally taken into consideration

Costs of Production

10

Current Global Resource Base

• Over 6 000 000 tU conventional identified resources – what is known today; not all mineable U on planet earth

• 100 years at current rates of consumption• Production costs have increased• Some unlikely to be mined (politics, public acceptance) –

more likely to be identified (dependent on price)• Resources geographically widespread, but Australia holds

largest share and one deposit dominates (Olympic Dam)

11

Distribution of Identified ResourcesRecoverable at a cost of <USD130/kgU (<USD 50/lbU3O8)

• Uranium relatively common, widespread – challenge is finding economically mineable deposits

• Great deal of exploration since 2006 – new discoveries, even when concentrating on previously known areas

12

Unconventional Uranium Resources

• Unconventional Resources- Phosphates

past production and potential (5 000 to 10 000 tU/yr globally) at current prices (US, Jordan, Egypt)

but barriers (regulatory, market uncertainties) knowledge preservation issue

- Black schists, shalesFinland: U recovery Talvivaara - bioheapleaching of black schist-

hosted Ni-Zn-Cu-Co deposit (test to remove U “impurity”) potentially 350 tU/yr

companies investigating Alum Shale possibilities in Sweden

13

• Recognition that nuclear power can produce competitively-priced, base-load electricity that is essentially free of greenhouse gases, combined with the role that nuclear can play in enhancing security of energy supplies, increases prospects for growth in nuclear generating capacity

• Growth from 370 GWe today to between 510 Gwe and 780 GWe by 2035• Impact on annual U requirements: from 60 000 to 70 000 tU today to between 87

000 tU and 138 000 tU by 2035 (production today 50 000 tU) • Significant growth in nuclear capacity and U demand anticipated in China and

India, South Korea and the Russian Federation to a lesser extent• Some flexibilities; e.g. uranium tails assays

– specifying lower tails assays at enrichment facilities - 0.3% to 0.25% reduces U requirements by 9.5%

– need low cost, excess enrichment capacity since this increases enrichment requirements by about 11%

Red Book Projections of Nuclear Generating Capacity and U Demand to 2035

14

Uranium Supply – Demand to 2035

15

Where is increased mine production planned?By 2020• Kazakhstan: 24 000 tU/yr (from 13 900 tU in 2009)• Australia: 10 100 – 24 200 tU/yr (from 8 500)• Canada: 17 730 – 19 000 tU/yr (from 9 900)• Namibia: 8 000 – 19 000 tU/yr (from 4 600)• Niger: 9 500 – 10 500 tU/yr (from 3 200)• Russian Federation: 7 600 – 11 990 tU/yr (from

3 600)

16

Considerations• No mine operates at full capacity over its lifetime• Technical challenges• Mines take as much as 10 years or more to progress from

resource definition to production in most jurisdictions– Challenging and lengthy regulatory requirements and

processes• Infrastructure and labour issues in developing countries• Costs of production have increased but market prices have

declined • Supply chain relatively thin, some key facilities aging• Geopolitical risks

17

Overcoming Obstacles – Public Resistance

• Often public opinions based on past practices– continue communicating best practices– encourage open and transparent operations:

accelerate efforts to contribute to studies on energy costs and GHG emissions from all types of mining operations (in particular, low-grade OP and ISL)

independent third party evaluations of operations in remote regions

– accelerate efforts to stabilize remaining legacy sites

18

Overcoming Obstacles – Mine Development Times

• Mine licensing and development times in some jurisdictions growing in length, at times related to environmental assessment requirements– Regulatory requirements in some jurisdictions

unnecessarily complicated by regulatory layers with, at times, conflicting requirementsCommitment by governments and regulators to

accelerate harmonization processes, without compromising health, safety and environmental protection

19

Government Actions Add Uncertainty and Impact Market

• Non-Proliferation- down blending HEU to LEU fuel- Pu disposition and MOX fuel production- multilateral fuel cycle initiatives

• Secondary supplies- release of government inventories- U tails re-enrichment

20

Conclusions

• Sufficient resources have been identified to meet even high case growth in nuclear generating capacity until 2035– Less than half of the resource base consumed by 2035 under

high growth scenario• Strong market conditions will be required

– Considerable investment needed to develop required production increases and maintain/expand old

– Weak market has already caused delays in project development

21

Conclusions

• Supply prone to disruption until capacity increased and diversified – Secondary Supplies will be needed (how much is left?)– Investment conditions challenging – continuation of financial

crisis could delay development• Strong safety and environmental record must be maintained and

communicated