\n\tBy Greg Peel<\/p>\n
\n\tIt's been an eventful year in the global uranium market.<\/p>\n
\n\tThe year began with the globally significant Ranger mine in the Northern Territory shutting down due to flooding, and there is still no guarantee operator Energy Resources of Australia ((ERA)) will decide the veteran mine can be commercial from here on. ERA needs to sort out the costly business of ensuring water management for the future of the open cut mine and whether or not it will proceed with the planned underground Ranger Deeps project. Resistance from the local indigenous population remains an issue, as is the case with ERA's seemingly pie in the sky hopes for its Jabiluka<\/span> prospect in the Kakadu<\/span> National Park.<\/p>\n \n\tERA is 67% owned by global diversified mining giant Rio Tinto ((RIO)), and Rio's Rossing<\/span> mine in Namibia is also in decline. Paladin Energy's ((PDN<\/span>)) neighbouring<\/span> Langer<\/span> Heinrich and Kayakeleera<\/span> mines are world-class, but Paladin has been beset by problems and delays in its Langer<\/span> expansion and Kaya<\/span> ramp-up.<\/p>\n \n\tRio's rival BHP<\/span> Billiton<\/span> ((BHP<\/span>)) has grand plans to expand uranium mining at its Olympic Dam project. The development has met with state government approval but realistically such plans are very long term.<\/p>\n \n\tMarch brought the Japanese tsunami and the Fukushima reactor disaster, the ramifications of which continue to reverberate. Aside from taking the wind out of uranium pricing, the disaster has led to a substantial political response. Switzerland and Germany now have plans in place to phase out of nuclear energy, and a change in government in France next year would likely bring the same result. France is the highest proportionate consumer of nuclear powered electricity in the world.<\/p>\n \n\tJapan has obviously needed to rethink its nuclear energy policy, and while still undecided its has moved to at least close down old or vulnerable reactors for now, potentially unleashing significant uranium stockpiles into world supply. The US has not announced any significant change to its nuclear policy, but the government has discovered that the environmental clean-up of legacy projects can be funded by re-enriching state-owned stockpiles of uranium tailings. This has added another supply source to the global market.<\/p>\n \n\tThe Australian federal Labor party has voted to allow the export of uranium to India for peaceful purposes, lifting the previous ban based on India's failure to sign the global nuclear non-proliferation treaty. Pakistan believes it should be afforded the same deal, but one might politely suggests “good luck”. The policy is yet to be ratified in parliament.<\/p>\n \n\tThe Indian announcement had uranium stock investors in Australia all excited given the upside in potential demand from India, yet given India already happily imports uranium from Canada and others, the lifting of Australia's ban does not alter the global demand-supply equation.<\/p>\n \n\tIn the meantime Rio Tinto is in a battle with Canada's globally significant producer Cameco<\/span> over potential acquisitions in that country, suggesting Rio is not giving up on its uranium business. Cameco<\/span> could teach Rio a thing or two about flooded mines, given the company's huge Cigar Lake prospect has been delayed by flooding for years now and is yet to come on line. Paladin owns substantial uranium prospects in Queensland where a state ban on uranium mining is yet to be lifted thanks to the power of the local coal mining unions. As to whether federal policy will be able to influence state policy in Queensland is up for debate. It never has before.<\/p>\n \n\tChina offers the greatest demand upside into the future through the number of reactors it intends to build, and that policy has not been dampened by Fukushima other than to provoke more robust safety considerations. Indeed, China and India between them have a total of 228 reactors in the official planning or proposal stages, notes Uranium Investing News.<\/p>\n \n\tWhich brings us to Kazakhstan. This former Soviet state may have suffered a good deal of parody in recent years, but as the second largest FSU state by area after Russia the country boasts expansive oil, gas and coal deposits as well as significant gold, copper, lead, zinc and chromium resources. Kazakhstan is also home to 15% of the world's known uranium and state-owned Kazatomprom<\/span> has tripled uranium production in the past three years. In 2009, notes Uranium Investing News, Kazakhstan became the world's leading producer at 28% of global production, increasing that level to 33% in 2010. Kazatomprom<\/span> expects production to increase by 25,000-30,000 tonnes<\/span> annually over the next decade.<\/p>\n \n\tIn terms of its GDP growth curve, Kazakhstan rivals China. Standard & Poor's has given Kazakhstan a higher credit rating than Russia given a higher export-to-consumption ratio than its neighbour<\/span>. And speaking of neighbours<\/span>, China and India are only a stone's throw away.<\/p>\n \n\tThat's nice.<\/p>\n \n\tSo significant is Kazakhstan's potential uranium supply that in the wake of Fukushima the country has decided it does not want to bite the hand that feeds it. Therefore like OPEC and crude oil, and Qatar and LNG, Kazakhstan has now decided to limit production – to 20,000 tonnes<\/span> next year.<\/p>\n \n\tThe spot uranium price has struggled to gain any traction since it found support at around US$50\/lb after the initial Fukushima-led drop. With the future of global uranium demand remaining somewhat uncertain, real end-users and end-consumers have backed away from significant commitments leaving mostly traders and hedge funds to fiddle around the periphery, as industry consultant's TradeTech's<\/span> weekly reports would suggest.<\/p>\n \n\tLooking ahead however, the global uranium market will likely be one controlled effectively by one large former Soviet state.
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